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