Demand

The demand curve is downward sloping because

1. as consumer purchase substitutes the quantity demanded of the good falls, 2. the benefit of consuming more of a good falls with each additional unit so the price consumers are willing and able to pay also falls with increased consumption 3. as prices rise, the purchasing power of each dollar earned falls and consumers are willing and able to buy less of a good

an increase in the price of a good's complement will cause

a decrease in the demand for the good

an increase in the price of a good's substitute will cause

an increase in the demand for the good

complements are goods that are

consumed together

more of a good will be demanded at each price if:

consumers' perceptions of the good improve

a graphical representation of the relationship between the price of a good, service or resource and the quantity that individuals and firms are willing and able to buy all else held constant describes the

demand curve

Three different ways of expressing information about the demand for a good, service or resource

demand schedule, demand, and demand curve

The terms "normal" and "inferior" refer to what happens to:

demand when income changes

What makes one good a substitute for another is

how people respond to a change in price

The effect that a change in the price of a good or service has on the purchasing power of a consumer's income

income effect

for _________ goods, an increase in income decreases demand and a decrease in income increases demand

inferior

increase in income decreases demand and a decrease in income increases demand for what type of goods (inverse relationship)

inferior goods

prices of related goods, complements and substitutes, are

non-price determinants of demand

The demand curve will shift when:

non-price determinants of demand change

increase in income increases demand and a decrease in income decreases demand for what type of goods

normal goods

Two goods are ____________ if an increase in the price of one good increases the demand for the other

substitutes

Non-price determinants of demand

tastes and preferences, the number of buyers, and buyer expectations

when there is an increase in demand:

the demand curve shifts to the right

when there is a change in demand

the entire demand curve shifts to the right or left

The market demand represents..

the horizontal summation of individual demand curves

Whether a good is normal or inferior depends on

the preference of all consumers int he aggregate

The income effect, the substitution effect and diminishing marginal utility together explain

why demand curves are downward sloping