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16 terms

Concepts related to consumer choice and demand

STUDY
PLAY
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