Chapter 4 Flashcards
demand
the desire, ability, and willingness to buy a product
Microeconomics
deals with behavior and decision making by small units
demand schedule
a listing that shows the various quantities demanded of a particular product at all prices that might prevail in the market at a given time
demand curve
a graph showing the quantity demanded at each and every price that might prevail in the market
Law of Demand
quantity demanded varies inversely with price
market demand curve
the demand curve that shows the quantities demanded by everyone who is interested in purchasing a product
marginal utility
the amount of satisfaction a person gets from consuming one more unit of a product
diminishing marginal utility
with succeeding unit someone consumes, the satisfaction decreases
change in quantity demanded
people buy a different quantity of a product if that product’s price changes, appearing appearing as a movement along the demand curve
income effect
that portion of a change in quantity demanded caused by a change in a consumer’s real income when the price of a product changes
substitution effect
that portion of a change in quantity demanded due to a change in the relative price of the product
change in demand
consumers demand different amounts at every price, causing the demand curve to shift to the left or the right
substitutes
products that can be used in place of other products
complements
products that increase the value of other products
elasticity
a measure of responsiveness that tells us how a dependent variable such as quantity responds to a change in an independent variable such as price
