Chapter Four Vocabulary: Demand Flashcards
Demand
the desire to own something and the ability to pay for it
Law of Demand
consumers buy more of a good when its price decreases and less when its price increases
Substitution Effect
when consumers react to an increase in a good’s price by consuming less of that good and more of other goods
Income Effect
the change in consumption resulting from a change in real income
Demand Schedule
a table that lists the quantity of a good a person will buy at each different price
Market Demand Schedule
a table that lists the quantity of a good all consumers in a market will buy at each different price
Demand Curve
a graphic representation of a demand schedule
Ceteris Paribus
a Latin phrase that means “all other things held constant”
Normal Good
a good that consumers demand more of when their incomes increase
Inferior Good
a good that consumers demand less of when their incomes increase
Complements
two goods that are bought and used together
Substitutes
goods used in place of one another
Elasticity of Demand
a measure of how consumers react to a change in price
Inelastic
describes demand that i snot very sensitive to a change in price
Elastic
describes demand that is very sensitive to a change in price
