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1) Consumer Taste: Consumer taste is literally a buyer’s preference for a product or service. In other words, a person may select a particular detergent brand over another one. Consumer taste can also be viewed from the market’s perspective as a whole. For example, when the market wanted more healthy alternatives in the food industry, you saw fast food places start offering healthier alternatives such as fruits, salad, etc.
2) Excise Tax: Excise tax is a type of tax that is on certain goods such as alcohol, fuel, tobacco, etc. General consumers do not have to worry about this type of tax as this a tax that businesses have to pay. Although regular consumers may have to pay an excise tax in regards to property taxes and/or on their retirement accounts. Excise taxes can also be paid by percentage or paid by unit.
3) Consumer Credit: Consumer credit is debt taken on by an individual to obtain money, goods, or services. An example of consumer credit would be loans, credit cards, etc. There are two types of consumer credit, those types being installment credit and revolving credit. Installment credit is a type of credit that is for an intentional purpose such as a house, car, etc. Whereas, with revolving credit, you can use this for any type of purchase. A house loan from the bank would be an example of installment credit and a credit card would be an example of revolving credit.
5) Individual Demand: Individual demand is when a particular good or service is chosen by a person. This choice comes down to a person’s desire and budget for a good or service. A consumer wants to purchase items that have a marginal value equal to its price. For this reason, a consumer will not overpay for an item that he/she does not value at that price.
Buy Normative Economics Assignment
6) Income Effect: Income effect is a change in demand for a good or service based on a consumer’s change in income. A raise in your wage or perhaps unemployment can change the goods or services you purchase. For example, if you have an increased wage, you may purchase more quantity of your current detergent brand or you may opt to purchase a more expensive brand. The same can be said if you are unemployed, you now may purchase less of a quantity of detergent or opt for a cheaper brand. ‘Income effect’ can affect individual demand for this reason.
7) Substitution Effect: Substitution effect is when a product loses sales due to an increase in price. Due to the increase in price, consumers switch to a cheaper product, thus resulting in lower sales for the original product. This concept goes hand-in-hand with the ‘income effect’ and ‘individual demand’ concepts. For example, a consumer may favor a particular detergent brand, but when its price changes (increases), so do that consumer’s ‘individual demand’ for that product as well. This is because the consumer no longer feels that the detergent brand has an equal value with its new price.
8) Creeping Inflation: Creeping inflation is a slower rise of a nation’s inflation where it increases slowly over time but stays consistent. After a longer period of time, and inflation is observed, you can see how inflation has increased a lot over time. Hence why its called, ‘Creeping Inflation’, because its literally creeps up on you over time. In regular inflation, the rise in prices is generally steep and more pronounced in a shorter period of time in contrast to creeping inflation.
9) Normal Goods: A normal good is a good in which the demand increases when a consumer’s income/wage increases. Name brands, expensive cars, luxury goods, etc are goods people would buy if their income increased because they can now afford them. This also correlates with the concept of ‘income elasticity of demand’ as the number of goods demanded are in contrast with incomes rise. For example, a consumer can now purchase a Mercedes and not have to drive his old Toyota due to his increase in income.
10) Inferior Goods: The concept of inferior goods correlates to normal goods but are quite different. Inferior goods are good that the demand decreases when a consumer’s income rises. So it is the opposite of a normal good. For example, a consumer may buy the store brand detergent, but when his income rises, the consumer may opt for the more expensive brand of detergent and stop buying the store brand.
11) Individual Supply: Individual supply is the supply (quantity) from a specific producer over a period of time. The quantity supplied to the market depends on factors such as conversion costs, price of the product, laws/regulation, and others. When a product’s supply rises, it usually coincides with the product’s price rising. This concept is illustrated by the supply curve model.
12) Market Supply: Market supply is similar to ‘individual supply’, except that this concept measures the quantity of a good from all the producers in the market. So its essentially the sum of all the supplies from different suppliers in the market. For example, with market supply, you would measure the quantity of detergent from all the producers in the market. Whereas with individual supply,
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