Essentials of Economics Ch4 Consumer Demand

Ceteris Paribus

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

inelastic (E<1)

price increase revenue increase price decrease revenue decrease

the market demand for a specific product is determined by

1)Tastes 2)Income 3)Expectations 4)Other Goods 5)The Number of Consumers in the market

demand curve

A curve describing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus.

demand

The ability and willing ness to buy specific quantities of a good at alternative prices in a given time period, ceteris paribus.

Total Utility

The amount of satisfaction obtained from entire consumption of a product.

law of diminishing marginal utility

The marginal utility of a good declines as more of it is consumed in a given time period.

Utility

The pleasure or satisfaction obtained from a good or service.

marginal utility

The satisfaction obtained by consuming one additional (marginal) unit of a good or service.

Unitary elastic (E=1)

price increase revenue no change price decrease revenue no change

Elastic (E>1)

price increases revenue decreases and price decreases revenue increase

price elasticity of demand

the percentage change in quantity demanded divided by the percentage in price. E=%change in quantity demanded/ % change in price

total revenue

the price of a product multiplied by the quantity sold in a given time period: p x q

Law of Demand

the quantity of a good demanded in a given time period increases as its price falls, ceteris paribus.

market demand

the total quantities of a good or service people are willing and able to buy at alternative prices in a given time period; the sum of individual demands.