Economics Chapter 3 TRIPE – Flashcards
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demand
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TRIPE
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Tastes and Preferences
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(T)
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Related Goods
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(R)
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Income
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(I)
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Population
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(P)
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Expected Price
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(E)
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Tastes and Preferences
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more desirable = more demand at each price; less desirable = decrease demand; new products change tastes
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Related Goods
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substitute goods can be used in place of another good (coke for pepsi); complementary goods are used together (PB and J)
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Substitute Goods
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increase in price of one good increases demand for the other; decrease in price of one good will decrease demand for the other; if pepsi price goes up, more people will buy coke
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Complementary goods
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demanded jointly; if price of good goes up, demand for related good will decline (lettuce price increases, dressing demand decreases); price of good goes down, demand for related good goes up (price of tuition goes down, demand for textbook goes up)
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Income
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rise in this increases demand for goods; if this falls the decrease in demand for goods fall; normal goods vary directly with it; inferior goods vary inversely with it; more of this makes customers buy newer/more expensive versions of products
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Population
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increase in buyers = increase in demand; decrease in buyers = decrease in demand;
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Expected Prices
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expectation of future high prices makes a current demand increase; future decrease in price or higher income create a future demand increase; increase in demand make consumers decide to buy larger quantities of a product at each possible price
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Demand
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amount of product consumers are willing/able to purchase at possible prices during a period of time; price depends on relation between supply and demand
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Law of Demand
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(all else equal) as price falls, quantity demanded rises; as price rises, quantity demanded falls
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Increase in Demand
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consumers desire to buy more at each possible price (right)
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decrease in demand
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consumers buy less at each possible price (left)
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normal goods
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Goods for which demand goes up when income is higher and for which demand goes down when income is lower; varies directly with money income
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inferior goods
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a good that consumers demand less of when their incomes increase; varies inversely with money income
