1. Two conditions that create demand are the desire for a good or service and the ability and willingness to pay for it. Demand is not just what individuals want because it also depends on their willingness and ability to pay for the good or service.
2. Mr. Hust wanting to buy a Bentley is not necessarily demand because he may not have the ability or willingness to pay for it. Demand requires both the desire for a good or service and the ability and willingness to pay for it.
3. Demand refers to the amount of a good or service that consumers are willing and able to buy at a certain price and time. The Law of Demand states that as the price of a good or service increases, the quantity demanded decreases, and vice versa. Quantity demanded refers to a specific quantity of a good or service that consumers are willing and able to buy at a certain price.
4. A demand curve is a graphical representation of the relationship between the price of a good or service and the quantity demanded by consumers. It slopes downwards, indicating that as the price of the good or service increases, the quantity demanded by consumers decreases. This visually represents the Law of Demand, which states that as the price of a good or service increases, the quantity demanded decreases.
5. The income effect is the change in quantity demanded of a good or service due to a change in income. The substitution effect is the change in quantity demanded of a good or service due to a change in the price of a substitute good or service. The law of diminishing marginal utility states that as a consumer consumes more units of a good or service, the additional satisfaction derived from each additional unit decreases. These concepts help prove/explain the Law of Demand by showing how changes in price, income, and substitutes can affect the quantity demanded by consumers.
6. A determinant is a factor other than the price of a good or service that affects the demand for it. Examples of determinants include consumer income, tastes and preferences, the availability of substitutes, and the price of related goods. A determinant affects the entire demand curve, causing it to shift either to the right (increase in demand) or to the left (decrease in demand). For example, an increase in consumer income would shift the demand curve for a normal good to the right, while a decrease in the availability of substitutes would shift the demand curve for a specific brand of a good to the right.