EconNotes3 - THE DEMAND SIDE OF THE MARKET Quantity Demand...

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THE DEMAND SIDE OF THE MARKET 07/02/2008 17:38:00 Quantity Demand     The amount of good or service that a consumer is willing and able to  purchase at a given price. Demand Schedule     table  showing the relationship between the price of a product and the  quantity of the product demanded. Demand Curve     curve  showing the relationship between the price of a product and the  quantity of the product demanded. Market Demand     The demand by all the consumers of a given good or service. The Law of Demand     Holding everything else constant, when the price of a product falls, the  quantity demanded of the product will increase, and when the price of a  product rises, the quantity demanded of the product will decrease. SUBSTITUTION EFFECT o The change in the quantity demanded of a good that results from a  change in price making the good more or less expensive  relative to  other goods that are substitutes . THE INCOME EFFECT o The change in the quantity demanded of a good that results from the  effect of a change on the consumer purchasing power. PURCHASING POWER
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o The quantity of goods that can be bought with a fixed amount of  income. Ceteris Paribus      (all else equal)     The requirement that when analyzing the relationship between two variables  – such as price and quantity demanded – other variables must be held  constant. A shift of a demand curve is an increase or decrease in demand.
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This note was uploaded on 03/18/2008 for the course ECON 002 taught by Professor Mcleod,markpehlivan,ayseozg during the Spring '08 term at Penn State.

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EconNotes3 - THE DEMAND SIDE OF THE MARKET Quantity Demand...

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