Economics-chapter 4 Pearson Prentice-Hall

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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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Consumers will buy more of a good when it’s price decreases and less when it’s price increases.
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Substitution Effect
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Reaction of consumers to an increase in a good’s price by consuming less of that good & more of other goods.
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Income Effect
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Changes in consumption that result from changes in real income.
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Demand Schedule
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Explains the law of demand in table form.
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Demand Curve
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A graph that shows the same info as a demand schedule.
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Market Demand Schedule
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A table that lists the quantity of a good all consumers in a market will buy at each different price.
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Ceteris Paribus
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Latin phrase. Means “all other things are held constant”.
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Normal Good
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A product or good that consumers demand more of when their income increases.
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Inferior Good
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A product or good that consumers demand less of when their incomes increase.
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Demographics
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Info such as age, race, gender, income level, and occupation of a population.
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Complements
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Two good that are bought and used together
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Substitutes
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Goods that are used in place of one another
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Elasticity of Demand
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Measure of how consumers respond to price changes
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Inelastic
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Described demand that is not very sensitive to price changes
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Unitary Elasticity
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Describes demand whose elasticity is exactly equal to 1.
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Total Revenue
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Total amount of money a company receives by selling goods or services.

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