demand

• Market


  Created when buyers and sellers interact
• Sub-market


  Part of an overall market with unique characteristics, with different market structures
• Demand


  The quantity of a good or service that consumers are able and willing to buy at a given price during a given period of time
• Price changes


  Affect quantity demanded
• Demand curve


  Illustrates the relationship between price and quantity demanded
• Marginal utility


  The extra satisfaction derived from consuming one extra unit of the good
• The demand curve is downward sloping because of diminishing marginal utility
• Substitution effect


  The good becomes more expensive than alternatives, causing consumers to switch to substitutes
• Income effect


  Disposable income reduces, leading to a fall in demand
• Individual demand


  The demand of an individual or firm, measured by the quantity bought at a certain price at one point in time
• Market demand


  The sum of all individual demands in a market
• Derived demand


  The demand for one good is linked to the demand for a related good
• Composite demand


  The good demanded has more than one use
• Joint demand


  Goods are bought together
• Competitive demand


  Demand for goods which are substitutable
• Movements along the demand curve

  1. Expansion of demand at lower price

  2. Contraction of demand at higher price
• Price changes


  Cause movements along the demand curve
• Shifting the demand curve

  1. Inward shift (lower quantity demanded at market price)

  2. Outward shift (higher quantity demanded at market price)
• Factors that shift the demand curve (PIRATES)

  • Population
  • Income
  • Related goods
  • Advertising
  • Tastes and fashions
  • Expectations
  • Seasons
• an inferior good is when quantity demanded decreases in response to an increase In income
• a giffen good is where as price increases demand increases due to income effect outweighing substitution effect
• complementary goods are consumed jointly
• a Veblen good is where demand rises as price rises because people feel a higher price reflects its value
• diminishing marginal utility is as a person consumes more the satisfaction they derive from the good decreases
• effective demand is where demand is supported by the intention and ability to buy
• latent demand is the willingness to buy but not yet have the ability to purchase