Chapter 3 Flashcards
Demand Schedule
Table showing the negative relation between price and quantity demanded
Demand Curve
Graph showing the negative relation between price and quantity demanded
Law of Demand
There is a negative relation between price and quantity demanded
Substitution Effect
Consumers will replace, ‘substitute’, more expensive goods with cheaper goods
Income Effect
A change in the price of a good can change the quantity that consumers will demand of that good and related goods, based on how the price change affects their real income
Diminishing Marginal Utility
Consumers are willing to pay less and less price because the extra utility they get from successive units is decreasing
Individual Demand
Demand of one consumer
Market Demand
Demand by all consumers in the market, horizontal summation of all individual demand curves
Complements in Consumption
Both goods are consumed together
Complements in Production
Both goods are produces together at the same time
Substitutes in Consumption
Either good will satisfy your need
Substitutes in Production
Either good can be produced
Supply Schedule
Table showing the positive relation between price and quantity supplied
Supply Curve
Graph showing the positive relation between price and quantity supplied
Law of Supply
There is a positive relation between price and quantity supplied
