Demand-The amount of a good or service that a consumer is wiling and able to buy at various possible prices during a given time period.
Quantity Demand- The amount of a good or service that a consumer is wiling and able to buy at each particular price during a given time period.
The Law of Demand- States that an increase in a good's price causes a decrease in the quantity demanded and that a decrease in price causes an increase in the quantity demand.
Purchasing power- The income thatpeople have available to spend on goods and services.
Income Effect- Any increase or decrease in consumer's purchasing power caused by a change in price.
Substitution Effect- The tendency of consumers to substitute a similar, lower-priced product for another product that is relatively more expensive.
Diminishing Marginal Utility- The marginal utility of each unit consumed imnishes with each unit.
Demand Curve- Plots this information on a graph.
Demand Shedule
- Shows the relationship between the price of a good or service and the quantity that consumers demand.
Determinants of Demand- 5 factors Consume tastes and preferences, market size, Income, Prices of related goods, and consumer expectations
Substitute goods- Goods that can be used to replace the purchase of similar gooods when prices rise.
Complementary goods- Goods that are commonly used with other goods.
Elasticity of demand- the degree to which changes in good's price affect the quantity demanded by consumers.
Elastic demand- exists when small change in a good's price causes a major, opposite change in the quantity demand.
Inelastic demand- exists when a change in a good's price has little impact on the quantity demanded.
Total revenue- The total income that a business recieves from selling its product.
Normal Good- High income and increase in demand for goods.
Infererior goods- High income and decrease in demand for goods.

Inelastic Demand:
-The product is a necessity
-There are few or no readily available substitutes for the product
- The product's cost reprsents a small portion of consumers' income
Examples: salt, oil, water
Elastic Demand
-The product is not a necessity
-The are readily availale substitutes
-The product's cost represents a large portion of consumers' income
Examples: fast food, snacks, vehicles
Determinants of Demand
Consumer tastes and preferences
-market size
-prices of related goods
-Consumer expectations

Law of Demand
-income effect
1. lower prices increase the consumer's purchasing power and increase the quantity demanded
2. may not apply if consumer still plans on buying the same amount of a product they originally wanted, even with a price change
-substitution effect
1. higher price for product causes a decrease in the quantity demanded because another similar product can be used
2. may not apply because a rise in price may not lower the quantity demanded if an essential good or service has no readily available substitute
-diminishing marginal utility
1.product's overall utility typically increases as more of the product is consumed. However, as more units of a product are consumed, the satisfaction received from consuming each additional unit declines.
2. there's a limit to a product's utility to consumers and thus a limit to consumers' demand.
Related Goods
-substitute goods
1. use similar product in placement of another when prices change (ex.: butter and margarine)
2. increase in product's price leads to increased demand for the product's substitute goods
-complementary goods
1. product used with another product (ex.: paint and paintbrushes)
2. increase in product's price causes decreased demand for that product's complementary goods

Shifts in Demand:
many nonprice factors can shift demand curve:

Consumer tastes and prefernces
market size
prices of related goods
consumer expectations

Connection to everyday life:

Check out this article: http://bit.ly/cvI1F4. It provides a good glimpse of how demand has changed in video rentals as a result of consumers' tastes and preferences.
An example of how demand can change as a result of price of related goods: Demand goes up for hamburger buns when the price of ground beef drops.
An example of how demand changes as a result of consumer tastes and preferences: Demand for iPads rises when they ad a second generation to the series.

- http://articles.sfgate.com/2009-05-24/business/17200359_1_oil-prices-oil-costs-oil-market
- http://www.palmbeachpost.com/money/dont-blame-spill-for-gas-prices-668977.html
He is an article about oil demand- http://omrpublic.iea.org/