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demand
is the WILLINGNESS to buy a good or service and the ability to pay for it
law of demand
STATES that when prices go down, quantity DEMANDED increases. When prices go up, quantity demanded decreases
Demand schedule
is a LISTING of how much of an item an INDIVIDUAL is willing to purchase at each price
Market Demand Schedule
is a LISTING of how much of an item ALL consumers are willing to purchase at each price
demand curve
GRAPHICALLY shows the data from a DEMAND schedule
Market demand curve
GRAPHICALLY shows the data from a MARKET DEMAND schedule
Law of diminishing marginal utility
STATES that the MARGINAL benefit of using each additional unit of a product during a given period will decline
income effect
is the change in the amount that consumers will buy because the purchasing power of their INCOME changes
Substitution effect
is a change in the amount that consumers will buy because they buy SUBSTITUTE goods instead
Change in quantity demanded
is an increase or decrease in the AMOUNT demanded because of CHANGE in price
change in demand
occurs when something prompts consumers to buy DIFFERENT amount at every price
Normal goods
are GOODS that consumers demand MORE of when their income rise
Inferior goods
are GOODS that consumers demand LESS of when their income rise
Substitutes
are goods and services that can be used IN PLACE of each other
complements
are goods that are used TOGETHER, so a rise in demand for one increases the demand for the other
Elasticity of demand
is a MEASURE of how responsive consumers are to price changes
Elastic Demand
if quantity demanded changes SIGNIFICANTLY as price changes
Inelastic Demand
if quantity demanded changes LITTLE as price changes
Unit elastic demand
if the PERCENTAGE change in price and quantity demanded are the same
Total revenue
is a company’s INCOME from selling its products
Total revenue test
is a METHOD of measuring elasticity by comparing TOTAL REVENUE
