Demand Curve Shift Explanation (Vocabulary Flashcards)

Vocabulary flashcards covering key concepts from the Demand Curve Shift handout: slope vs. shift, complements and substitutes, normal vs. inferior goods, perfect inelasticity, reservation price, and non-price factors.

Demand curve slope

The steepness of the demand curve, reflecting how much quantity demanded changes when price changes; a steeper slope indicates less price sensitivity (lower elasticity).

Demand curve shift

A change in demand caused by non-price factors (income, related goods’ prices, tastes) that moves the entire demand curve left or right, rather than a movement along the curve.

Complement good

A good that is often consumed with another; a change in the price or demand for one affects the demand for its complement (e.g., Prego sauce and Barilla pasta).

Substitute good

A good that can replace another in consumption; a decrease in the price of one tends to decrease demand for the other (consumers switch).

Inferior good

A good for which demand falls as income rises.

Normal good

A good for which demand increases as income rises.

Perfectly inelastic demand

Demand with a vertical curve where quantity demanded does not respond to price changes within a range (e.g., Tyson’s lunar burial seat up to a threshold price).

Reservation price

The maximum price a buyer is willing to pay for a good; determines whether they purchase at a given price.

Non-price factors affecting demand (example concept)

Factors such as income, tastes, and prices of related goods that cause shifts in demand, distinct from movement along the curve due to price changes.