Economics: Demand and Supply

Front

What does the Law of Demand state?

Back

As the price of a good or service increases, the quantity demanded decreases and vice versa

Front

Who demands goods and services in the product market?

Back

Consumers demand goods and services in the product market.

Front

What does the demand curve graph illustrate?

Back

The relationship between price (on the vertical axis) and quantity demanded (on the horizontal axis).

Front

What is a normal good?

Back

A good where demand increases as income rises.

Front

What is an inferior good?

Back

A good where demand decreases as income rises.

Front

What causes a movement along the demand curve?

Back

A change in price.

Front

What causes a shift of the demand curve?

Back

Factors such as income, preferences, or the price of related goods (INSECT)

Front

What does the acronym INSECT stand for in demand curve shifters?

Back

Income, Number of buyers, Substitute goods, Expectations about future prices, Complementary goods, and Tastes.

Front

What happens when the demand curve shifts to the left?

Back

Buyers demand less of the good at each price.

Front

What is the relationship between substitute goods?

Back

The demand for one moves in the same direction as the price of substitute