Economics Chp.7 (1)

Card Set Information

Economics Chp.7 (1)
2013-09-19 19:33:11
Economics OHS

1st 9 weeks
Show Answers:

  1. Demand
    • Amount of good or service that consumers are able and willing to buy at various prices.
    • (How much are you willing to buy at a specific price?)
  2. Supply
    Amount of a good or service that a producer or supplier is willing to sell at various prices
  3. The Law of Demand
    Quantity demanded and price move in opposite directions. (Price goes up, demand goes down. Price goes down, demand goes up)
  4. Real income effect 
    (Determines of Demand)
    Consumers buy less if product prices rise and real income stays the same
  5. Substitution effect 
    (Determines of Demand)
    Consumers will buy a lesser priced product if satisfaction level remains the same
  6. Diminishing Marginal Utility
    The reduction in the ability of a good or service to satisfy consumer wants
  7. Changes in Population 
    (Major causes of change in demand)
    • Available market increase or decrease with population shifts 
    • Ex: Housing, hospital, schools
  8. Changes in Income 
    (Major causes of change in demand)
    • Prices will go up as income goes up. Down if income goes down. 
    • Ex: Holiday shopping in 2008
  9. Changes in taste and preferences 
    (Major causes of change in demand)
    • Fads, new income
    • Ex: Hannah Montana, Starbucks, Air Jordan, I phone
  10. Substitutes 
    (Major causes of change in demand)
    Consumers will buy substitutes if prices of desired products get too high
  11. Complementary goods 
    (Major causes of change in demand)
    • Good that sell together ( co dependent). If one price goes down, the other's move with it. 
    • Ex: Toys and batteries, milk and cereal