Econ Chp 4 Demand

ceteris paribus

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

inferior good

a good that consumers demand less of when their incomes increase

normal good

a good that consumers demand more of when their incomes increase

elasticity of demand

a measure of how consumers respond to price changes

demand schedule

a table that lists the quantity of a good a person will buy at various prices in a market

law of demand

consumers will buy more of a good when its price is lower and less when its price is higher

inelastic

describes demand that is not very sensitive to price changes

elastic

describes demand that is very sensitive to a change in price

unitary elastic

describes demand whose elasticity is exactly equal to 1

list and describe three causes for a shift in the demand curve

price,income,quality. if the price of good goes up people buy less,curving the line down. If a person has a great income they don't have a limit on price. a good quality will be bought than a bad product.

total revenue

total amount of money a firm receives by selling goods and services

complements

two goods that are bought and used together

substitution effect

when consumers react to an increase in a good's price by consuming less of that good and more of a substitute good

describe the substitution effect in your own words and give an example

when the prices of a good goes up people are more likely to buy a "substitution", for example if apples price go up then people buy bananas

will there always be a demand for inferior goods?how could demand for an inferior good decrease?

yes,because inferior gods tend to be cheaper which entitles low income citizens

substitutes

goods that are used in place of one another

income effect

the change in consumption that results when a price increase causes real income to decline