Ch. 2 Demand and Consumer Choice

Question 1

Individual Demand Curve

Answer 1

A graph that plots the quantity of an item that someone plans to buy at each price

Question 2

Law of Demand

Answer 2

The tendency for a quantity demanded to be higher when the price is lower

Question 3

Rational Rule for Buyers

Answer 3

Buy more of an item if the marginal benefit of one or ore is greater than or equal to the price

Question 4

Market Demand Curve

Answer 4

A graph showing total quantity of each item demanded by the entire market at each price

Question 5

Shift in Demand Curve

Answer 5

A moment of the demand curve itself

Question 6

Increase in Demand

Answer 6

Shift to the right; at ever price quantity demanded rises

Question 7

Decrease in Demand

Answer 7

Shifts to the left; quantity demanded is lower at each price

Question 8

Normal good

Answer 8

A good in which higher income results in an increase of demand

Question 9

Inferior good

Answer 9

A good in which higher income results in a decrease of demand (people with lower income buy more of it)

Question 10

Complementary goods

Answer 10

Goods that go together; demand for one decreases, price for others increases

Question 11

Substitute goods

Answer 11

Goods that replace each other; demand for one good increases if price of other increases

Question 12

Network effect

Answer 12

Products or services become more useful to you as more people use it

Question 13

Congestion effect

Answer 13

Products and services become less valuable as more people use them

Question 14

Horizontal summation

Answer 14

Adding up demands to see the quantity at one price

Question 15

Exoginist factor

Answer 15

Not pictured in the curve, shifts the whole line either way

Question 16

Ceteris Paribus

Answer 16

All else equal