Chapter 4 Flashcards
What are the factors that affect consumer demand?
- Price of the product
- Price of other products
- Disposable income of consumers
- Tastes and preferences
A ______ is a schedule that shows how many units of a good the consumer is willing and able to buy at different prices for that good during some specified time in a specified market
demand curve
Movement along a demand curve when the price of the good changes is referred to as a change in _______
the quantity demanded
A shift in the demand curve resulting from a change in prices of other goods, income, population, and/or tastes and preferences is referred to as a change in ______
demand
Changes in ______ refer to changes in the composition of the population, attitudes toward nutrition and health, and attitudes toward food safety, lifestyles, technological forces, and advertising
tastes and preferences
the assumption that all other factors that might affect demand are held constant during the time period. The latin phrase most often used by economists
Ceteris paribus
A shift in the demand curve generally caused by changes in the prices of complements or substitutes, income, and tastes and preferences
Change in demand
The change in quantity observed on the horizontal axis associated with a movement up or down the demand curve as opposed to a shift in the demand curve
Change in quantity demanded
goods typically consumed together such as hamburgers and hamburger buns; goods for which cross-price elasticities are negative
Complement
The consumption bundle that maximizes total utility and is feasible as defined by the budget constraint. The marginal utilities per dollar spend on a good or service must be equal
consumer equilibrium
a measure of the savings achieved by consumers at the current market price from the price they would have been willing to pay for a specific quantity of a good or service. Consumer surplus is equal to the area below the market demand curve and above the market equilibrium price
consumer surplus
a schedule that shows how many units of a good the consumer will purchase at different prices for that good during some specified time in a specified market, all other factors constant
demand curve
A schedule that shows how many units of a good the consumer will purchase at different income levels, all other factors constant
Engel curve
as disposable income of a consumer increases, the percentage of income spent for food decreases if all other factors remain constant
Engel’s Law
decrease in the price of a product means the consumer can afford to buy more of the product (or vise versa)
income effect
Goods for which consumption falls when income increases and falls when income decreases
inferior goods
The curve, along with the supply curve, determines the equilibrium price for a given commodity or service. This captures the individual demand schedules of consumers participating in this particular market
market demand curve
goods for which consumption rises when income increases and falls when income decreases
Normal goods
The connection or locus of all tangency points between budget lines and indifference curves. Each tangency identifies a point on the demand curve
price-consumption curve
refers to movement of a demand curve to the right (left) from its initial position as income or other factors increase (decrease) demand for a good or service
shifts in the demand curve (leftward, rightward)
substitution of a product for another because the price of the former has declined or increased
Substitution effect
these factors, along with prices, incomes, and wealth, influence the demand for a particular good or service. Consumer attitudes toward caloric intake and cholesterol can affect the demand for one product over another.
tastes and preferences
