chapter 4 economics vocab – Flashcards
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Demand
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The desire to own something and the ability to pay for it.
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Law of Demand
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Anyone who has ever spent money will easily understand the law of demand.
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Substitution effect
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the ways that a consumer can change his or her spending.
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income effect
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the change in an individual's or economy's income and how that change will impact the quantity demanded of a good or service.
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demand curve
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a graphic representation of a demand schedule
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ceteris paribus
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all other things held constant.
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normal good
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goods the consumer desires more of when their income increases
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inferior good
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a decrease in income causes the demand for these goods to fall.
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complements
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two goods that are bought and used together.
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substitutes
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goods used in place of one another
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elasticity of demand
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dictates how drastically buyers will cut back or increase their demand for a good.
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inelastic
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relatively unresponsive to price changes
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elastic
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when one buys much less of a product once the price is increased.
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total revenue
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the amount of money the company receives by selling it's goods.
