Ch.3

• What does the term 'demand' refer to in economics?


  The quantity of a good or service that consumers are willing and able to buy at a given price
• What is the concept of ceteris paribus?


  It means 'all other things being equal' in economic analysis
• How does the price of a good or service relate to the quantity demanded?


  There is an inverse relationship; as price increases, quantity demanded decreases
• What are the types of demand explained in economics?

  • Joint demand: Interdependent demand for goods
  • Composite demand: Demand for a good with multiple uses
  • Competitive demand: Demand for goods that compete with each other
• What is the law of demand?


  It states there is an inverse relationship between quantity demanded and price, ceteris paribus
• What does a demand curve represent?

  A graph showing how much of a good will be demanded at any given price
• What happens to the quantity demanded when prices fall?


  More of the good will be demanded
• What are non-price factors that determine demand?


  Income, the price of other goods, and consumer preferences
• What is the difference between individual demand and market demand?


  Individual demand is for a single consumer, while market demand is the sum of all individual demands
• What is joint demand?


  Demand for goods that are interdependent and consumed together
• What is composite demand?


  Demand for a good that has multiple different uses
• What is competitive demand?


  Demand for goods that are in competition with each other
• What does a shift in the demand curve indicate?


  A change in the underlying determinants of demand, not a change in price
• What is the effect of a price increase on demand?


  It causes a contraction of demand
• What is the effect of a price decrease on demand?


  It causes an extension of demand
• What happens to the demand curve when there is an increase in demand?


  The demand curve shifts to the right