Ch. 4 vocab Flashcards
(14 cards)
Ceteris paribus
latin phrase for “all other things held constant”
Complementary goods
2 goods that are bought and used together
Demand
the desire to own something and the ability to pay for it
Demand curve
graphic representation of a demand schedule
Demand schedule
lists the amount of a good that a person will purchase at each price in a market
Elastic
describes demand that is very sensitive to a change in price
Income effect
change in consumption of goods caused by a change in income
Inelastic
unresponsive to price changes
Inferior good
a good that consumes less of when their incomes increase
Law of demand
economic law that states that consumers buy more of a good when its price decreases and less when its price increases
Normal good
a good that consumes demand more of when their incomes increase
Subsitute good
goods used in place of each other
Total revenue
total amount of money a firm receives by selling goods/services
Substitution effect
when consumers react to an increase in a good’s price by consuming less of that good and more of other goods
