shows how much of a good or service the consumer plans to demand at different possible prices
Individual demand curve
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movement down a demand curve following a fall in price
extension
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as a good's price falls, more is demanded
Law of demand
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the movement of a demand curve to a new position
shift
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rightward shift (in demand)
increase
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leftward shift (in demand)
decrease
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movement up a demand curve following and increase in price
contraction
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acting in pursuit of self-interest, which for a consumer means attempting to maximise the welfare, satisfaction or utility gained from the goods and services consumed
rational behaviour
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the satisfaction or economic welfare an individual gains from consuming a good or service
utility
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the additional welfare, satisfaction or pleasure gained from consuming one extra unit of a good
marginal utility
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for a single consumer the marginal utility derived from a good or service diminishes for each additional unit consumed
law of diminishing marginal utility
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when one party to a market transaction possesses less information relevant to the exchange than the other
asymmetric information
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a method of economic analysis that applies psychological insights into human behaviour to explain how individuals make choices and decisions
behavioural economics
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a rough and practical method or procedure than can be easily applied when making decisions
rule-of-thumb
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when making decisions, an individual's rationality is limited by the information they have, the limitations of their minds and the finite amount of time available in which to make decisions
bounded rationality
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limited self control in which individuals lack in self-control to act in what they see as their self-interest
bounded self-control
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a mistake in reasoning or in some other mental thought process occurring as a result of using rules-of-thumb or holding onto one's preferences and beliefs, regardless of contrary information
cognitive bias
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occurs when individuals make judgements bout the likelihood of future events according to how easy it is to recall examples of similar events
availability bias
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a cognitive bias describing the human tendency when making decisions to rely too heavily on the first piece of information offered
anchoring
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forms or patterns of behaviour considered acceptable by a society or group within that society
social norms
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restrictions imposed by regulation and/or laws that restricts and individual's freedom to behave in certain ways
economic sanctions
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factors which encourage people to think and act in particular ways, try to shift groups and individual behaviour in ways which comply with desirable social norms
nudges
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concern for the welfare of others
altruism
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the quality of being impartial, just or free of favouritism
fairness
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a framework setting out different ways in which choices can be presented to consumers, and the impact of that presentation on consumer decision making
choice architecture
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an option that is selected automatically unless an alternative is specified
default choice
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how something is presented influence the choices people make
framing
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people are required by law to make a decision
mandated choice
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offering people a limited number of options so that they are not overwhelmed by the complexity of the situation
restricted choice
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Other cards in this set
Card 2
Front
movement down a demand curve following a fall in price
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