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18 Cards in this Set
- Front
- Back
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Demand
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amount of a product that individuals are willing & able to buy over a certain period of time
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Individual Demand Schedule
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quantity of a good that an individual is willing & able to buy at each price, other things equal
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Individual Demand Curve
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graphical representation of individual demand schedule, showing the quantity of a good that an individual is willing & able to buy at each price, other things equal
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Law of Demand
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other things equal, the lower the price of a product, the larger the quantity demanded; the higher the price of a product, the smaller the quantity demanded
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Substitution Effect (of a Price Change)
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tendency to purchase more of those products that have become relatively cheaper & fewer of those products that have become relatively more expensive when relative prices change
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Purchasing Power
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amount of goods & services that consumers are able to buy with their limited incomes, given prices; also called real income
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Income Effect (of a Price Change)
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change in the quantity demanded of a good due to the effect that the change in its price has on the individual's purchasing power or real income
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Market Demand Schedule
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total amount demanded of a good by all the consumers at each price, other things equal; the summation of the individual demand schedules
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Market Demand Curve
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graphical representation of the market demand schedule, showing the total quantity demanded of a good by all consumers at each price, other things equal; horizontal summation of the individual demand curves
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Change in Quantity Demanded
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a movement along the demand curve as price changes, other things equal
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Change in Demand
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a shift in the entire demand curve
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Normal Good
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a good whose consumption rises as income rises, other things equal
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Substitutes
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products that provide the same general kind of services; specifically, two goods whose relationship is such that a decrease in the price of one good decreases the demand for the other good
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Complements
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products that are used together to provide a service, specifically, two goods whose relationship is such that a decrease in the price of one good increases the demand for the other good
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Engel Curve
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graphical representation of the relationship between income & quantity demanded, other things equal
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(Price) Elasticity of Demand
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measure of the responsiveness of quantity demanded to changes in the price of a product along a demand curve; specifically, the percentage change in quantity demanded divided by the percentage change in price in absolute value
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Income Elasticity of Demand
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measure of the responsiveness of quantity demanded to a change in the income; specifically the percentage change in quantity demanded divided by the percentage change in income
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Cross-Price Elasticity of Demand
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percentage change in the demand for one good divided by the percentage change in the price of a related good
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