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15 Cards in this Set
- Front
- Back
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Define Demand
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A consumer is willing and able to buy a good or service
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Define inferior good
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a good for which demand falls when income rises
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Define normal good
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a good that consumers demand more of when their income increases
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What four factors cause the demand curve to shift
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a. consumer expectations of future prices - if something will go on sale for a week then demand will drop
b. consumer tastes and advertising c. prices of related goods - complementary and substitute goods d. population - if population increases then so will demand and vice versa |
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Define elasticity of demand
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it determines how a change in price will affect total revenue
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Define Ceteris paribus
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It means keep all things constant except for the price
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Define market demand schedule
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it shosw the quantiites of products demanded at each price by all consumers in a market
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Define inelastic demand
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When the price increases or decreases it will have a very small impact on how much consumers will buy
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What is the law of demand?
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When the Price of a good increases consumers will buy less and when the price decreases they will buy more
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Define shifting of a demand curve
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it is a changed in demand at each and every price
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define total revenue
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the price x quantity demanded
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Define income effect
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rising prices make the consumer feel poorer and decreasing prices make the consumer feel richer.
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Define subsitution effect
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consumers will replace the expensive good with a cheaper good
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Define complement
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two goods that are bought and used together
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What happens to the demand of a complementary good when the price of the of the other good goes up
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Demand decreases
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