Term
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Definition
| The willingness and ability to buy a specific product/service at various prices. |
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Term
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Definition
| The amount of a good/service a consumer is willing to buy at a specific price. |
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Term
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Definition
| Price and Qd have an inverse relationship. As price rises, Qd falls and vice versa. |
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Term
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Definition
- Income - prices affect purchasing power
- Substitute- If a product is available that does the same thing at a cheaper price, people will buy it.
- Diminishing Marginal Utility
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Term
| Diminishing Marginal Utility |
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Definition
| As you use multiple of a product, the satisfaction from each additional product is reduced. When the marginal utility is less than the price, people will stop buying the product. |
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Term
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Definition
| A table that shows the Qd at various prices. |
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Term
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Definition
| A chart showing the Demand Schedule. ALWAYS slopes downward. |
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Term
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Definition
- Tastes / Preferences
- Market Size
- Income
- Prices of related goods (i.e. substitutes and complementary products)
- Consumer Expectations
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Term
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Definition
| The degree to which a change in prices affects the Qd. |
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Term
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Definition
| Exists when a small change in price creates a large change in Qd. |
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Term
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Definition
| When a change in price has little to no effect on the Qd. |
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Term
| Total Revenues Test (Total Receipts Test) |
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Definition
| If revenue increases after an increase in price, a good has inelastic demand. |
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Term
| Determinants of Elasticity |
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Definition
- Existence of Substitutes
- The percentage of a person's budget spent on a good
- The time allowed to adjust for the price change
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