Economics chapter 4

Demand schedule

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

Incentive

A motivating influence that causes one to act

Change in price will impact _____ _____

Quantity demand

Demand curve

Graph showing the quantity demanded at each and every price that might prevail in the market at a given time

The law of demand

States that more will be demanded at lower prices and less at higher prices

Inverse

In the opposite way

Utility

The amount of usefulness or satisfaction that someone gets from the use of a product

Marginal utility

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

Diminishing marginal utility

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

Many thing may effect the demand curve, but ___ is the only factor that can cause a movement along the demand

Price

Consumer incomes

If income goes up, consumers are usually willing to buy more at all possible prices-shift in the entire demand curve

Consumer tastes

Consumers often change their minds on which products to buy-advertising, change in season, fashion trends

Substitutes

Competing products that can be used in place of one another

Complements

Products that increase the use of other products

Expectations

The way people think about the future

Number of consumers

When more consumers enter the market, market demand increases, and the curve shifts to the right

Elasticity

A measure of responsiveness that describes the way a dependent variable changes in response to a change in an independent variable (typical price)

Elastic demand

When a change in price causes a relatively larger change in quantity demanded

Inelastic demand

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

Total revenue

Multiply the price of a product by the quantity demanded for any point along the demand curve

technical

related to a particular subject such as art, science, or trade

What factors determine a products demand elasticity

Can the purchase be delayed, are adequate substitutes available, does the purchase use a large portion of income

adequate

just enough to satisfy a requirement

microeconomics

the part of economic theory that deals with behavior and decision making by individual units, such as a person or a firm

demand

various amounts of a product that someone is willing and able to buy over a range of possible prices at one point in time