Economics - Demand

Demand is the number of units of a product purchased at any given market price at any given time.

A demand schedule is a table showing the demand for a product with price over quantity.

A demand Curve is a graph showing the demand for a product with price and quantity on the vertical and horizontal axes, respectively.

Utility
Utility is the measure of benefit or satisfaction got from consuming a particular good. Marginal Utility is the addition to total utility caused by the consumption of an extra unit of that good. Utility is measured in Utils.

Economic Goods
The definition of an Economic Good is one which can command a price. The characteristics of them are as follows:
 * It must cause utility.
 * It must be transferable.
 * It must be scarce in relation to it's demand.

Assumptions Regarding Consumers
In order to organise Economic thought and create laws regarding Economic, various assumptions are made. Of these the most essential are the assumptions about consumers. It is assumes that:
 * they act rationally,
 * they have limited income,
 * they aim to get maximum utility from their income and,
 * they are subject to the Law of Diminishing Marginal Utility.

The Law of Diminishing Marginal Utility
This states that, as a consumer consumes additional units of a good then at some point, they Marginal Utility derived from the consumption of that good will begin to decrease.

Related Assumptions

 * 1) It only applies after a certain point. This is called the Origin.
 * 2) It assumes the Utility of the consumed good has not been used up before the next unit is consumed.
 * 3) It assumes that income does not change
 * 4) It does not apply to addictive goods or medicines

Equilibrium
In Economics, Equilibrium refers to the ideal situation under any given set of circumstances. For consumers, the Equilibrium is where consumers are getting the Maximum Utility from their income.

The Principle of Equi-Marginal Utility/Returns
This states that a consumer will be in Equilibrium when he or she spends his or her income is such a way that the ratio of margnial utility to price is the same for all goods consumed.

Factors Which Influence Demand

 * 1) P) The price of the product
 * 2) Y) The persons income
 * 3) Pog) The price of related goods
 * 4) T) Taste
 * 5) Cr.) Price and availability of Credit
 * 6) E) The consumers expectations about the future
 * 7) G) Government
 * 8) U) Unforseen Circumstances.

These acronyms (P, Y, etc.) are official and used. They (the first 4 especially) are to be memorised.

Price
An increase in price will decrease demand. This is due to a decrease in value. It works in reverse, if price increases, demand will decrease.