Economics - Chapter 2

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  • Created by: sammilaw
  • Created on: 02-11-14 14:54
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  • CHAPTER 2: Demand
    • Demand - the amount that consumers are willing and able to buy buy at each given price level
    • Effective demand - demand supported by the ability to pay for the good/service
    • Market - total demand in a market for a good, the sum of all individuals' demand, at each given price
    • Contractions in demand - falls in demand due to an increase in prices
    • Extensions in demand - rise in demand due to a fall in price
    • Normal goods - goods/services which see an increase in demand when incomes rise
    • Inferior goods - goods/services which see a decrease in demand when incomes rise
    • Complementary products - goods that are consumed together
    • Composite demand - a good that is demanded for more than one purpose, so an increase in demand for one purpose reduces the available supply for the other, typically leading to higher prices
    • Derived demand - when the demand for one good comes from the demand of another

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