CH 4 ECON

Demand

the desire, ability, and willingness to buy a product

Microeconomics

area of economics that deals with behavior and decision making by small units, such as individuals and firms

Demand Schedule

listing that shows the various quantities demanded of a particular product at all prices that might prevail in the market at a given time

Demand Curve

graph showing the quantity demanded at each and every price that might prevail in the market

Law of Demand

the quantity demanded of a good or service varies inversely with it’s price

Market Demand Curve

demand curve that shows the quantities demanded by everyone who is interested in purchasing the product

Marginal Utility

the extra usefulness or satisfaction a person gets from acquiring or using one more unit of a product

diminishing marginal utility

extra satisfaction we get from using additional quantities of the product begins to diminish

change in quantity demanded

a movement along the demand curve that shows a change in the quantity of the product purchased in response to a change in price

income effect

the change in quantity demanded because of a change in price that alters consumers’ real income

substitution effect

change in quantity demanded because of the change in the relative price of the product

change in demand

cause the demand curve itself to shift

substitutes

can be used in place of other products

complements

use of one product increases the use of the other product

elasticity

a measure of responsiveness that tells is how a dependent variable such as quantity responds to a change in an independent variable such as price

demand elasticity

the extent to which a change in price causes a change in the quantity demanded

elastic

when a given change in price causes a relatively larger change in quantity demanded

inelastic

given change in price causes a relatively smaller change in quantity demanded

unit elastic

given change in price causes a proportional change in quantity demanded

market demand curve

individual demand curves for a particular product can be added up to get the _____

incomes, tastes, and expectations, and price of related good

A change in consumer ____, ___, ____, and ____ causes a change in demand