Ch. 2 Flashcards
change in quantity demanded
the change in quantity associated with movement along the demand curve
complementary goods
Goods that go together. Your demand for a good will decrease if the price of a complementary good rises.
congestion effect
When a good becomes less valuable because more people use it.
decrease in demand
A shift in the demand curve to the left
diminishing marginal benefit
Each additional item yields a smaller marginal benefit than the previous item
holding other things constant
A commonly used qualifier noting your conclusions may change if some factor that you haven’t analyzed changes.
increase in demand
A shift of the demand curve to the right
individual demand curve
A graph plotting the quantity of an item that someone plans to buy at each price
inferior goods
A good for which higher income causes a decrease in demand
law of demand
The tendency for quantity demanded to be higher when the price is lower.
market demand curve
A graph plotting the total quantity of an item demanded by the entire market, at each price.
movement along the demand curve
A price change causes movement from one point on a fixed demand curve to another point on the same curve.
network effect
When a good becomes more useful because other people use it. If more people buy such a good, your demand for it will also increase.
normal good
A good for which a higher income causes an increase in demand.
The Rational Rule for Buyers
Buy more of an item if the marginal benefit of one more is greater than or equal to the price
