CHPT 4 Definitions Flashcards
Demand
the desire to own something and the ability to pay for it
Law of Demand
Consumers will buy more of a good when its price is lower and less when its price is higher
Substitution Effect
When consumers react to the increase in a good’s price by consuming less of that good and more a substitute good
Income Effect
the change in consumption that results when a price increase causes a real income to increase or decline
Demand Schedule
A table that list the quantity of a good a person will by at various prices in a market
Market Demand Schedule
A table that lists the quantity of a good for all consumers in a market will buy at various prices
Demand Curve
Graphic representation of a demand schedule
CETERIS PARIBUS
Latin phrase meaning “all other things held in constant”
Normal good
A good that consumers demand more of when their income increases
Inferior good
A good that consumers demand less of when their income increases
Demographics
The statistical characteristicsof populations and population segments,especially when used to identify connsumer markets
Complements
two goods that are bought and used together
Substitutes
goods that are used in place of another
Elasticity of Demand
A measure of how consumers react to price change
Inelastic
demand that is not senitive to price changes
