Ch 4 Flashcards
A combination of quantities that someone would be willing and able to buy over a range of possible prices at a given moment.
Demand
Branch of economic theory that deals with behavior and decision making by small units such as individuals and firms.
Microeconomics
Listing showing the quantity demanded at all possible prices that might prevail in the market at a given time.
Demand Schedule
Something that motivates
Incentives
Graph showing the quantity demanded at each and every possible price that might prevail in the market at a given time.
Demand Curve
Rule stating that more will be demanded at lower prices and less at higher prices; an inverse relationship between prices and quantity demanded.
Law of Demand
Demand curve that shows the quantities demanded by everyone who is willing and able to purchase a product at all possible prices at one moment in time.
Market Demand Curve
Additional satisfaction or usefulness as additional units of a product are acquired .
Marginal Utility
Decrease in additional satisfaction or usefulness as additional units of a product are acquired.
Diminishing Marginal Utility
Movement along the demand curve showing that a different quantity is purchased in response to a change in price.
Change in Quantity Demanded
That portion of a change in quantity demanded that is caused by a change in a consumer’s income when the price of a product changes.
Income Effect
The portion of a change in quantity demanded that is due to a change in the relative price of the good
Substitution Effect
Different amounts of a product are demanded at every price, causing the demand curve to shift to the left or to the right.
Change in Demand
Competing products that can be used in place of one another; products related in such a way that an increase in price of one increases the demand for the other.
Substitutes
Products that increase the use of other products related in such a way that an increase in the price of one reduces the demand for both.
Complements
A measure of responsiveness that tells us how a dependent variable, such as quantity demanded or quantity supplied, responds to a change in an independent variable such as price.
Elasticity
The extent to which a change in price causes a change in the quantity demanded; has three cases: elastic, inelastic, and unit elastic.
Demand Elasticity
Type of elasticity in which a change in the independent variable (usually price) results in a larger change in the dependent variable (usually quantity demanded or supplied).
Elastic
The case of demand elasticity where the percentage change in the independent variable (usually price) causes a less than proportionate change in the dependent variable (usually quantity demanded or supplied).
Inelastic
Elasticity where a change in the independent variable (usually price) generates a proportional change of the dependent variable (quantity demanded or supplied.
Unit Elastic
