Economics Chapter 4 Test Flashcard
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the desire to own something and the ability to pay for it
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Demand
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goods that consumers demand less of when their incomes increase
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Inferior Good
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the way that consumers respond to price changes
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Elasticity of Demand
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shows that quantities demanded at each price by all consumers in the market
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Market Demand Schedule
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When all of the babies were born demand in baby products increased. As that generation got older demand of schools and jobs increased.
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Baby Boom affects a change in demand
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If you buy much less of a good after a small price increase Elasticity is greater than 1
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elastic
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Your demand for a good that you will keep buying despite a price increase Elasticity is less than 1
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Inelastic
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says that when a good's price is lower, consumers will buy more of it an and when the price is higher, consumers will buy less of it
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Law of demand
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If you know the price will go up in the future your current demand goes up. If you know the price will go down in the future your current demand goes down.
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How Current Demand is related to future price
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It shifts to the right with an increase in income. If the demand curves shifts to the left it is because of a decrease in income.
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Shifts in the demand curves
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Elasticity is equal to 1
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Unitary elastic demand
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when consumers react to an increase in a goods price by consuming less of that good and more of other goods.
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Substitution Effect
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two goods that are bought and used together
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Complement
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goods used in place of each other
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Substitute
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a good that consumers demand more of when their incomes increase
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Normal good
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a graphic representation of a demand schedule
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Demand Curve
