Economics Chapter 4 Test Flashcard

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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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Inferior Good
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goods that consumers demand less of when their incomes increase
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Elasticity of Demand
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the way that consumers respond to price changes
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Market Demand Schedule
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shows that quantities demanded at each price by all consumers in the market
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Baby Boom affects a change in demand
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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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elastic
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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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Inelastic
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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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Law of demand
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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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How Current Demand is related to future price
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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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Shifts in the demand curves
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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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Unitary elastic demand
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Elasticity is equal to 1
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Substitution Effect
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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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Complement
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two goods that are bought and used together
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Substitute
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goods used in place of each other
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Normal good
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a good that consumers demand more of when their incomes increase
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Demand Curve
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a graphic representation of a demand schedule

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