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Flashcards in Chapter 4 Deck (17):
1

Demand

Desire to own something and the ability to pay for it

2

Law of demand

Consumers buy more of a good when it's price decreases and less when it's price increases

3

Substation effect

Consumers react to an increase in a good's price by consuming less of that good and more of other goods

4

Income effect

The change in consumption resulting from a change in real income

5

Demand schedule

Table that lists the quantity of a good a person will buy at each different price

6

Market demand schedule

Table that lists the quantity of a good all consumers in a market will buy at each different price

7

Demand curve

A graphic representation of a demand schedule

8

Ceteris paribus

A Latin phrase that means "all other things held constant"

9

Normal good

A good that consumers demand more of when their incomes increase

10

Inferior good

A good that consumers demand less of when their incomes increase

11

Complements

Two goods that are brought and used together

12

Substitutes

Goods used in place of one another

13

Elasticity of demand

A measure of how consumers react to a change in price

14

Inelastic

Describes demand that is not very sensitive to a change in price

15

Elastic

Describes demand that is very sensitive to a change in price

16

Unitary elastic

Describes demand whose elasticity is exactly equal to 1

17

Total revenue

The total amount of money a firm receives by selling goods or services