ECON-McGraw Hill- Chapter 4 Vocab – Flashcards
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demand
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The combination of desire, ability, and willingness to buy a product.
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microeconomics
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Part of economics that studies small units, such as individuals and firms.
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market economy
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Economic system in which people and firms make all economics decisions.
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demand schedule
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A table lists how much of a product consumers will buy at all possible prices.
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demand curve
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A curve that show the quantities demanded at all possible prices.
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law of demand
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Rule stating that consumers will buy more of a product at lower prices and less at higher prices.
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market demand curve
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A curve that shows how much of a product all consumers will buy at all possible prices.
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marginal utility
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Additional satisfaction or usefulness a consumer gets from having one more unit of a product.
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diminishing marginal utility
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Decrease in satisfaction or usefulness from having one more unit of the same product.
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change in quantity demanded
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Movement along the demand curve showing the amount someone is willing to purchase changes when the price changes.
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income effect
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That part of a change in quantity demanded due to a change in the buyer's real income when a price changes.
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substitution effect
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Part of a change in quantity demanded due to a price change that makes other products more or less costly.
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change in demand
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Shift of the demand curve when people buy different amounts of every price.
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substitutes
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Competing products that can be used in place of one another.
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complements
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Products that increase the use of other products.
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elasticity
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A measure of the responsiveness that shows how one variable responds to a change in another variable.
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demand elasticity
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A measure that shows how a change in quantity demanded responds to a change in price.
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elastic
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A Type of elasticity where a change in price causes a relatively larger change in quantity demanded.
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inelastic
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A type of elasticity where a price causes a relatively smaller change in quantity demanded.
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unit elastic
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Type of elasticity where a change in price causes a proportional change in quantity demanded.
