Ecomony Ch4 Flashcards
Demand
How much of a product consumers are both willing and able to buy at each possible price during a given period
Demand curve
Demand on a graph
Demand schedule
Demand in a chart
Individual demand
Demand of one person
Market demand
Sum of individual demands
Law of demand
Quantity demanded varies inversely with price
law of diminishing marginal utility
the more of a good an individual consumes the smaller the marginal utility with each additional unit.
marginal utility
the change in total utility resulting from an additional unit
quantity demanded
point on demand curve
shift of demand curve
right, quantity demanded increases. left, quantity demanded decreases
tastes
preferanses
total revenue
the amount of income that your business made from all sales before subtracting expenses
substitutes
something you buy instead of other products
compliments
something you buy together
normal goods
demand increase when income increase
inferior goods
demand decreases when income increases
determinants of demand
change in consumer income, price of related product, size of population, consumer expectation, consumer taste
elasticity/elasticity formula
percent change in quantity demanded/percent change in price
total revenue formula
price*quantity demanded at that price
substitusjon effect
when the price of a related product makes you buy the substitute
elasticity
> 1.0 price lowers demand increases by a great rate
unit
stays equal
inelastic
<1.0 price lowers demand increases at low rate
real income
measured in goods and services
