ECON: Chapter 4: Terms to Remember

Question 1

demand

Answer 1

The ability and willingness to buy specific quantities of a good at alternative prices in a given time period, ceteris paribus.

Question 2

market demand

Answer 2

The total quantities of a good or service people are willing and able to buy at alternative prices in a given time period; the sum of individual demands.

Question 3

utility

Answer 3

The pleasure or satisfaction obtained from a good or service.

Question 4

total utility

Answer 4

The amount of satisfaction obtained from entire consumption of a product.

Question 5

marginal utility

Answer 5

The satisfaction obtained by consuming one additional (marginal) unit of a good or service.

Question 6

law of diminishing marginal utility

Answer 6

The marginal utility of a good declines as more of it is consumed in a given time period.

Question 7

ceteris paribus

Answer 7

The assumption that nothing else changes.

Question 8

law of demand

Answer 8

The quantity of a good demanded in a given time period increases as its price falls, ceteris paribus.

Question 9

demand curve

Answer 9

A curve describing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus.

Question 10

price elasticity of demand

Answer 10

The percentage change in quantity demanded divided by the percentage change in price.

Question 11

total revenue

Answer 11

The price of a product multiplied by the quantity sold in a given time period, p × q.