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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