Chapter 4 vocabulary

Unitary elastic

When the price elasticity of demand for a good is unit (or unitary) elastic (Ed = -1), the percentage change in quantity demanded is equal to that in price, so a change in price will not affect total revenue

Complements

complementary good or complement is a good with a negative cross elasticity of demand, in contrast to a substitute good. This means a good's demand is increased when the price of another good is decreased. Conversely, the demand for a good is decreased when the price of another good is increased

Demand curve

The plotting of the aggregated quantity to price pairings is what is referred to as an aggregate demand curve.

Substitution effect

The substitution effect is the economic understanding that as prices rise — or income decreases — consumers will replace more expensive items with less costly alternatives.

Elastic

This flatter curve means that the good or service in question is elastic. Meanwhile, inelastic demand is represented with a much more upright curve as quantity changes little with a large movement in price. Elasticity of supply works similarly.

Inferior good

inferior good is a good that decreases in demand when consumer income rises (or rises in demand when consumer income decreases), unlike normal goods, for which the opposite is observed.

Demographics

Demographic economics or population economics is the application of economic analysis to demography, the study of human populations, including size, growth, density, distribution, and vital statistics. Aspects of the subject include. marriage and fertility. the family.

Inelastic

Inelastic is an economic term used to describe the situation in which the quantity demanded or supplied of a good or service is unaffected when the price of that good or service changes.

Substitutes

Substitute goods are two goods that could be used for the same purpose. If the price of one good increases, then demand for the substitute is likely to rise. Therefore, substitutes have a positive cross elasticity of demand.

Income effect

The income effect in economics can be defined as the change in consumption resulting from a change in real income. This income change can come from one of two sources: from external sources, or from income being freed up (or soaked up) by a decrease (or increase) in the price of a good that money is being spent on.

Law of demand

the law of demand states that," all else being equal, as the price of a product increases (↑), quantity demanded falls (↓); likewise, as the price of a product decreases (↓), quantity demanded increases (↑)".

Demand

Demand is an economic principle that describes a consumer's desire and willingness to pay a price for a specific good or service. Holding all other factors constant, an increase in the price of a good or service will decrease demand, and vice versa.

Elasticity of demand

Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price, ceteris paribus.

Total revenue

Total revenue in economics refers to the total receipts from sales of a given quantity of goods or services. It is the total income of a business and is calculated by multiplying the quantity of goods sold by the price of the goods.

Demand schedule

Using a demand schedule, the quantity demanded per each individual can be summed by price, resulting in an aggregate demand schedule that provides the total demanded specific to a given price level.

Market demand schedule

a market demand schedule is a table that lists the quantity of a good all consumers in a market will buy at every different price. A market demand schedule for a product indicates that there is an inverse relationship between price and quantity demanded.

Ceteris paribus

ceteris paribus is the commonly used Latin phrase meaning 'all other things remaining constant.' The concept of 'ceteris paribus' is important in economics because in the real world, it is usually hard to isolate all the different variables that may influence or change the outcome of what you are studying.

Normal good

normal goods are any goods for which demand increases when income increases, and falls when income decreases but price remains constant, i.e. with a positive income elasticity of demand.