Economics Concepts and Choices Chapter 4 – Flashcards
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The desire, willingness, and ability to buy a good or service
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demand
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consumers buy more of a good when its price decreases and less when its price increases
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law of demand
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a table that shows the relationship between the price of a good and the quantity demanded
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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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market demand schedule
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A graph of the relationship between the price of a good and the quantity demanded.
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demand curve
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shows the data found in the market demand schedule
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market demand curve
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the principle that consumers experience diminishing additional satisfaction as they consume more of a good or service during a given period of time
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law of diminishing marginal utility
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A change in the quantity demanded of a product that results from the change in real income (purchasing power) caused by a change in the product's price. (buying 2 $5 items instead of 1 $10)
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income effect
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when consumers react to an increase in a good's price by consuming less of that good and more of a substitute good
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substitution effect
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movement along the demand curve that shows a change in the quantity of the product purchased in response to a change in price.
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change in quantity demanded
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A change in the quantity demanded of a good or service at every price; a shift of the demand curve to the left or right.
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change in demand
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Goods for which demand goes up when income is higher and for which demand goes down when income is lower.
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normal goods
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Goods for which demand tends to fall when income rises.
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inferior goods
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Goods and services that can be used for the same purpose.
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substitutes
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two goods for which an increase in the price of one leads to a decrease in the demand for the other. I.E. Related goods
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complements
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consumers' responsiveness or sensitivity to changes in price
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elasticity of demand
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Describes demand that is not very sensitive to a change in price
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inelastic
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A company's income from selling its products
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total revenue
