chap 4 Flashcards
demand
is the willingness to buy a good or service and the ability to pay for it.
law of demand
states that when prices go down, quantity demanded increases. When prices go up, quantity demanded decreases.
demand schedule
is a listing of how much of an item an individual is willing to purchase at each price.
market demand schedule
is a listing of how much of an item all consumers are willing to purchase at each price.
demand curve
graphically shows the data from a demand schedule.
market demand curve
graphically shows the data from a market demand schedule
law of diminishing marginal utility
states that the marginal benefit of using each additional unit of a product during a given period will decline
income effect
is the change in the amount that consumers will buy because the purchasing power of their income changes.
substitution efffect
is a change in the amount that consumers will buy because they buy substitute goods instead
change in quantity demand
is an increase or decrease in the amount demanded because of a change in price.
change in demand
occurs when something prompts consumers to buy different amounts at every price
normal goods
are goods that consumers demand more of when their incomes rise.
inferior goods
are goods that consumers demand less of when their incomes rise.
substitutes
are goods and services that can be used in place of each other
complements
are goods that are used together, so a rise in demand for one increases the demand for the other
