Consumer Behaviour and Demand Flashcards
Behaviour economics
A branch of economics that accepts that consumers and other economic agents do not always act rationally and looks at why this might be so
Default
To fail to pay money that you owe at the right time
Economic Welfare
The level of well-being or prosperity or living standards of an individuals or group of individual or group of individuals such as a country
Homo-economicus
The rational human used by economists when constructing, explaining and verifying models
Macroeconomics
The study of the economy as a whole, including inflation, growth and unemployment
Microeconomics
The study of the behaviour of individuals or groups such as consumers, firms or workers, typically within a market context
Neo-classical theory
A theory or economics that typically starts with the assumption that economic agents will maximise their benefits and act rationally, and that develops how resources will be allocated in markets and at what price through the forces of demand and supply; the margin is a key concepts in Neo-classical theory
Utility
The satisfaction or benefit derived from consuming a good or a set of goods
Conditions of demand
Factors other than price, such as income or the price of other goods, which lead to changes in the demand and are associated with shifts in the demand curve
Consumer surplus
The difference between how much buyers are prepared to pay for a good and what they actually pay
Contraction of demand
When quantity demand demand for a good falls because its price rises; it is shown by a movement up the demand curve
Demand curve
The line on a price/quantity diagram that shows the level of level of effective demand at any given price
Demand or effective demand
The quantity purchased of a good at any given price, given price, given that other factors of demand remain unchanged
Extension of demand
When quantity demanded for a good increases because its price falls; it is shown by a movement down the demand curve
Law of diminishing marginal utility
The value or unity that individual consumers gain from the last product consumed falls the greater the number consumed. So the marginal unity of consuming the sixth product is lower than the second product consumed
