Consumer goods and services
Consumer goods and services help satisfy our needs and wants directly There is a sub-division between:
Consumer durables: Products that provide a steady flow of satisfaction / utility over their working life (e.g. a washing machine or using a smartphone).
Consumer non-durables: Products that are used up in the act of consumption e.g.
drinking a coffee or turning on the heating) iii) Consumer services: E.g. a hair cut or ticket to a show or sporting event.
Demand
Quantity of a good or service that consumers are willing and able to buy at a given price in a given time period.
Demand curve
A demand curve shows the relationship between the price of an item and the quantity demanded over a period of time. For normal goods, more of a product will be demanded as the price falls.
Diminishing marginal utility
Marginal utility is the change in satisfaction from consuming an extra unit of a good or service. Beyond a certain point, marginal utility may start to fall (diminish). If marginal utility becomes negative, then consuming an extra unit will cause total utility to fall.
Effective demand
Demand in economics must be effective. Only when a consumers’ desire to buy a product is backed up by an ability to pay for it do we speak of demand.
Excess demand
The difference between the quantity supplied and the higher quantity demanded when price is set below the equilibrium price. This will result in queuing and an upward pressure on price.
Law of demand
The law of demand is that there is an inverse relationship between the price of a good and demand. As prices fall, we see an expansion of demand. If price rises, there should be a contraction of demand.
Perverse demand curve
A perverse demand curve is one which slopes upwards from left to right. Therefore, an increase in price leads to an increase in demand. This may happen where goods are strongly affected by price expectations.
Willingness to pay
The maximum price a consumer is prepared pay to obtain a product.
