Econ Exam 2

Market demand curve

A curve that shows how much of a product all consumers will buy at all possible prices

Demand Schedule

A table that lists how much of a product consumers will buy at all possible prices

Marginal Utility

Additional satisfaction or usefulness a consumer gets from having one or more unit of a product

Demand Marginal Utility (main idea)

As we buy more of an item, we get less satisfaction from each additional purchase

Demand

Combination of desire, ability, and willingness to buy a product

Diminishing marginal utility

Decrease in satisfaction or usefulness from having one more unit of the same product

An introduction to demand (main idea)

Demand is a concept specifying the different quantities of an item that will be bought at different prices

Market Economy

Economic system in which people and firms make all economic decisions

Sec 1 Big idea

Economics provides strategies, theories, and analytical tools to deal with everyday problems

How do you react to a change in the price of an item, and how does this illustrate the concept of demand?

If the price decreases then i am able to purchase more of that good than if it was at a higher price, allowing the demand for the product to increase with the decreasing price

How is a change in the quantity demanded illustrated on the demand curve?

If the price of a good changes then the quantity demanded changes for that good too

How does a demand curve help explain people's buying habits?

It shows that people are willing to buy more of an item at a low price and less of an item at a high price

Change in quantity demanded (definition)

Movement along the demand curve showing that the amount someone is willing to purchase changes when the price changes

Change in the Quantity Demanded (main idea)

Only a change in price can cause a change in quantity demanded

Mircoeconomics

Part of economics that studies small units, such as individuals and firms

Law of Demand (definition)

Rule stating consumers will buy more of a product at lower prices and less at higher prices

Change in demand

Shift of the demand curve when people buy different amounts at every price

What problems might economists have in trying to measure marginal utility?

Some consumers are willing to buy more units than another consumer would for the same price

Income Effect

That part in change in quantity demanded due to a change in the buyers real income when a price changes

Why do economists call the demand curve one of the main "tools" of their profession?

The demand curve shows how if the prices of a good go down how much more quantity demanded increases

How does the market demand curve reflect the Law of Demand?

The demand curve shows how much one product consumers will buy at certain prices and the lower the price the more the more consumers are willing to buy

Why is demand curve downward slowing?

The price is decreasing and increasing the quantity demanded

What causes a change in demand?

The price of a good decreases so more people start purchasing that good

Law of Demand (main idea)

There is an inverse relationship between the price if an item and the quantity demanded

Although people buy more of a product when the seller lowers the price, some items such as luxury goods are not offered at a lower price. Why?

luxury good is a good made for the a wealthier consumer to show they have more status over a lower paid consumer.