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19 Cards in this Set
- Front
- Back
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Demand
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the desire to own something and the ability to pay for it
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Law of Demand
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consumers buy more of a good when its price decreases and less when its price increases
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Substitution Effect
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when consumers react to an increase in a good's price by consuming less of that good and more of the other good
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Income Effect
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the change in consumption resulting from a change in real income
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Demand Schedule
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a table that lists the quantity of a good a person will at each different price
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Market Demand Schedule
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a table that lists the quantity of a good all consumers in a market will buy at each differnt price
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Demand Curve
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a graohic representation of a demand schedule
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Ceteris Paribus
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a Latin phrase that means "all other things held in constant"
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Normal Good
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a good that consumers demand more of when their incomes increase
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Inferior Good
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a good that consumers demand less of when their incomes increase
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Complements
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two goods that are bought and used together
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Substitutes
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goods used in place of one another
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Elasticity of Demand
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a measure of how consumers react to a change in price
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Inelastic
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describes demand that is not very sensitive to a change in price
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Elastic
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describes demand that is very sensitive to a change in price
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Unitary Elastic
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describes demand whose elasticity is exactly equal to 1
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Total Revenue
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the total amount of money a firm receives by selling goods or services
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Elasticity=
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Percentage change in quantity demanded/Percentage change in price
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Percentage Change=
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[(Original number - New number) / Original number] X 100
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