What it's: A competitive market refers to a market characterized by intense competition in which no player has a dominant power. It is identified as a perfectly competitive market with many buyers and sellers. And they individually cannot
What Are the Five Exceptions to the Law of Demand?
While it applies to most things we encounter daily, there are exceptions to the law of demand. Two of them are Veblen goods and Giffen goods. They show a positive relationship between their price and the quantity demanded by consumers. In some
Three Assumptions Underlying the Law of Demand
The three reasons or assumptions underlying the law of demand are the income effect, the substitution effect, and diminishing marginal utility. The first two describe how consumers react when the price of a product changes. The income effect relates
What is the difference between a movement and a shift in the demand curve?
The difference between a movement and a shift in the demand curve lies in the causing factors. The first occurs due to changes in its price. The second occurs due to changes in non-price factors such as consumer income, future price expectations, or
Reasons For a Downward-Sloping Demand Curve
A downward-sloping demand curve holds true in most of our day-to-day cases. It shows a negative relationship between price and quantity demanded. It complies with the law of demand. By the law of demand, a higher price lowers consumers'
Individual Demand: Definition, Its Curve, Determinants
What's it: Individual demand represents the quantity demanded by a person for a good at a given price level. Two conditions: he has the willingness to buy and has the ability to buy. At different price levels, the quantity demanded is also
What Are The Types of Demand?
This article will discuss the types of demand. What is a demand? Economists define it as the willingness and ability of consumers to buy goods at any given price. Willingness means we want things. Ability means we have the money (resources) to
What are the six non-price determinants of demand? Examples.
When we study demand theory, non-price determinants of demand refer to factors other than the price of the goods we study, where their changes can affect demand. Knowing them is important because they are not described from the model. They are
Social Cost in Economics: Meaning, Components, Formulas, and Effects
What's it: Social cost is private cost plus external cost. Private cost is borne by individuals directly involved in economic transactions or activities. Meanwhile, the external cost is borne by third parties not directly involved in the