Demand

Demand

1. Elasticity of Demand

   • Inelastic demand: when a change in price causes little or no change in consumer willingness to buy the product
     • iPhones
     • Electricty
     • Necessities
     • Milk for families with young children
   • Elastic demand: when a change in price greatly impacts consumer willingness to buy a product
     • Certain luxuries

2. Complementary Goods

   • Example: Burgers and Fries
     • Cheddar rounds and Frenchie Fries are not complementary because you can't buy them at the same time.
   • Hamburger prices go down and people then buy more fries

3. Law of Demand

   • low prices = high demand
   • high prices = low demand
   • Price is the money value that is placed upon a product

4. Demand is the quantity of a good that a consumer is willing to buy at a given price

5. Substitute

   • a product that can be used instead of another product for the same purpose
     • If the price of fish increases, then it is likely that the demand for chicken will increase
   • The more substitutes a product has, the more likely demand for it will be elastic

6. Marginal Utility

   • the amount of usefulness of satisfaction acquired by adding one more unit of a product
   • Diminishing marginal utility: decreasing satisfaction or usefulness as additional units of a product are acquired
     • buying lawnmowers

7. Demand Data

   • Demand scedule = table
   • Demand curve = graph
   • In reality, the rate of change of the demand curve becomes slower and more horizontal as quantity gets ever larger; this is beacuse of dimishing marginal utility

8. Job layoffs lead to lower demand for "wants" and luxuries, whereas the creation of jobs results in a higher demand for consumer goods

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