Concepts related to consumer choice and demand

Created by _Nirvanaaa 

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16 terms

The law of demand

As the demand increases the price increases. A fall in price of good or service will lead to increase in quantity demanded ceteris paribus

Inferior goods

Low quality goods and services that individuals buy less of as their income increases

Ceteris paribus

All other factors (not price) being equal/held constant

Subsitutes

PRODUCTS THAT CAN BE USED IN PLACE OF SOMETHING ELSE, FOR EXAMPLE, BUTTER IN PLACE OF MARGARINE. a PRICE INCREASE FOR ONE PRODUCT CAUSES DEMAND FOR THE OTHER PRODUCT TO INCREASE

Opportunity cost

The next best alternitive forgone when a decsion is made. It is the real cost of any decision and is the other good/service that could have been produced with the same recourses.

Scarcity

The economic term that describes the condition of limited resources relative to wants.

Wants

Things individuals would like to have but are not necessary in order to survive

Needs

Things individuals must have in order to sustain life

Choice

are based on limited means (time, income, skill, and knowledge)

Goods

Objects with a physical presnces, tangible items.

Services

What someone does for you.

Values

Core beliefs or key principles that we consider most importanat

Fair trading

Doing what is right and just when dealing with others.

What will cause a shift in a demand curve?

Income, income (direct) tax, advertising, taste/fashion/ price of a subsitute, price of a complement.

Causes of shifts of the demand curve to the right.

Increased disposable incomes, decreases income ( direct) tax, increased advertising for a product, price of a complement falls, price of a complement increases, product is more fashionable.

Causes of shift in the demand curve to the left.

Decreased dispoable income, increased income (direct) tax, price of a complement rises, price of a subsitute decreases, product is out of fashion

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