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Flashcards in Chapter 4 Deck (21):
1

demand

willingness to buy a good or service and ability to pay for it

2

law of demand

when price of good or service goes up, quantity demand goes down; when price of good or service goes down, quantity demand goes up

3

demand schedule

a table that summarizes one consumer's behavior

4

market demand schedule

a table that summarizes all consumers' behavior

5

demand curve

a graph that shows amount of an item a consumer will buy at each price

6

market demand curve

amount all consumers will buy at each price

7

law of diminishing marginal utility

marginal benefit of each additional unit declines as each unit is used

8

income effect

amount people buy changes as purchasing power of their income changes

9

substitution effect

amount people buy changes as they buy substitute products

10

substitutes

products used in place of each other

11

complements

goods that are used together

12

normal goods

demanded more when consumer's incomes rise

13

inferior goods

demanded less when consumers' incomes rise

14

elastic

quantity demanded changes greatly as price changes

15

inelastic

quantity demanded changes little as price changes

16

if there are substitutes for a product, is the demand elastic or inelastic?

elastic, consumers can find a different product if the price goes up

17

necessity

something needed for life

18

luxury

something desired but not essential

19

how do you calculate elasticity?

is change in quantity demanded greater than change in price?

20

total revenue

amount of money a company gets for selling its products

21

what is the formula for total revenue

TR = price x quantity sold