Chapter 4 vocab Flashcards
The desire to own something and the ability to pay for it
Demand
Consumers buy more of a good when its price decreases and less when its price increases
Law of demand
When consumers react to an increase in a goods price by consuming less of that good and more of other goods
Substitute effect
The change in consumption resulting from a change in real income
Income effect
A table that lists the quantity of a good a person will buy at each different price
Demand schedule
A table that lists the quantity of a good all consumers in a market will buy at each different price
Market demand schedule
A graphic representation of a demand schedule
Demand curve
A Latin phrase that means all other things held constant
Ceteris paribus
A good that consumers demand more of when their income increase
Normal good
A good that consumers demand less of when their incomes increase
Inferior good
Two goods that are bought and used together
Complements
Goods used in place of one another
Substitutes
A measure of how consumers react to a change in price
Elasticity of demand
Describes demand that is not very sensitive to a change in price
Inelastic
Describes demand that is very sensitive to a change in price
Elastic
