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demand
combination of desire, ability, and willingness to buy a product
microeconomics
branch of economic theory that deals with behavior and decision making by small units such as individuals and firms
demand schedule
listing showing the quantity demanded at all possible prices that might prevail in the market at a given time
demand curve
graph showing the quantity demanded at each and every possible price that might prevail in the market at a given time
Law of Demand
rule stating that more will be demanded at lower prices and less at higher prices; inverse relationship between price and quantity demanded
market demand curve
demand curve that shows the quantities demanded by everyone who is interested in purchasing a product
marginal utility
satisfaction or usefulness obtained from acquiring one more unit of a product
diminishing marginal utility
decreasing satisfaction or usefulness as additional units of a product are acquired
change in quantity demanded
movement along the demand curve showing that a different quantity is purchased in response to a change in price
income effect
the portion of a change in quantity demanded caused by a change in a consumer’s real income when the price of a product changes
substitution effect
the portion of change in quantity demanded due to a change in the relative price of the product
change in demand
consumers demand different amounts at every price, causing the demand curve to shift to the left or the right
substitutes
competing products that can be used in place of one another; products related in such a way that an increase in the price of one increases the demand for the other
complements
products that increase the value of other products; products related in such a way that an increase in the price of one reduces the demand for both
elasticity
a measure of responsiveness that tells us how a dependent variable such as quantity responds to a change in an independent variable such as price
demand elasticity
measure of responsiveness relating change in quantity demanded (dependent variable) to a change in price (independent variable)
elastic
type of elasticity where the percentage change in the independent variable (usually price) causes a more than proportionate change in the dependent variable (usually quantity demanded or supplied)
inelastic
type of elasticity where the percentage change in the independent variable (usually price) causes a less than proportionate change in the dependent variable (usually quantity demanded or supplied)
unit elastic
elasticity where a change in the independent variable (usually price) generates a proportional change of the dependent variable (quantity demanded or supplied)