Flashcards in Chapter 4- Section 1 Deck (11):
What three factors determine the demand for a product?
A desire for it and the ability and willingness to pay for it
What is microeconomics?
The area of economics that deals with behavior and decision-making by small units (individuals and firms)
What is the purpose of a demand schedule?
To show the various quantities demanded any particular product at all prices that might prevail in the market at a given time
What is the demand curve?
Graph showing the quantity demanded that each and every price that might prevail in the market
How is a demand curve similar to a demand schedule? How is it different?
Both show the quantity demanded at each and every price but one is a chart and the other is a curve
What does the law of demand state?
The quantity demanded of a good or service varies inversely with its price; when the price goes up quantity demanded goes down when the price goes down quantity demanded goes up
What does the market curve show?
The quantities demanded by everyone who is interested in purchasing the product
What is marginal utility?
The extra usefulness or satisfaction of person gets from acquiring or using one more unit of a product
How does the principle of diminishing marginal utility affect how much people are willing to pay?
Using additional quantities of the product this menaces satisfaction. It reduces the willingness to pay
States that the extra satisfaction we get from using additional quantities of the product begins to diminish
Finishing marginal utility