Unit 2: Chapter 4 -7 (Demand, Supply, (Demand, Supply, and Prices), Market Structures)

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Vocabulary

Microeconomics

Supply and Demand

Vocab

Last updated 7:45 PM on 9/11/26
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21 Terms

1
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Demand

The willingness to buy a good or service and the ability to pay for it.

<p>The willingness to buy a good or service and the ability to pay for it.</p>
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Law of Demand

When prices go down, quantity demanded increases. When prices go up, quantity demand decreases.

<p>When prices go down, quantity demanded increases. When prices go up, quantity demand decreases.</p>
3
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Demand Schedule

Listing of how much of an item an individual is willing to purchase at each price.

<p>Listing of how much of an item an individual is willing to purchase at each price.</p>
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Market Demand Schedule

Listing of how much of an item all consumers are willing to purchase at each price.

<p>Listing of how much of an item all consumers are willing to purchase at each price.</p>
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Demand Curve

Graphically shows data from Demand Schedule.

<p>Graphically shows data from Demand Schedule.</p>
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Market Demand Curve

Graphically shows data from Market Demand Schedule.

<p>Graphically shows data from Market Demand Schedule.</p>
7
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Law of Diminishing Marginal Utility

The marginal benefit of using each additional unit of a product during a given period will decline.

<p>The marginal benefit of using each additional unit of a product during a given period will decline.</p>
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Income Effect

The change in the amount that consumers will buy because the purchasing power of their income changes.

<p>The change in the amount that consumers will buy because the purchasing power of their income changes.</p>
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Substitute Effect

A change in the amount that consumers will buy because they buy substitute goods instead.

<p>A change in the amount that consumers will buy because they buy substitute goods instead.</p>
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Change in Quantity Demand

An increase or decrease in the amount demanded because of a change in price.

<p>An increase or decrease in the amount demanded because of a change in price.</p>
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Change in Demand

Occurs when something prompts consumers to  buy different amounts at every price.

<p><span style="background-color: transparent;">Occurs when something prompts consumers to&nbsp; buy different amounts at every price.</span></p>
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Normal Goods

Goods that consumers demand more of when their incomes rise

<p><span style="background-color: transparent;">Goods that consumers demand more of when their incomes rise</span></p>
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Inferior Goods

Goods that consumers demand less of when their incomes rise.

<p><span style="background-color: transparent;">Goods that consumers demand less of when their incomes rise.</span></p>
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Substitutes

Goods and services that can be used in place of each other

<p><span style="background-color: transparent;">Goods and services that can be used in place of each other</span></p>
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Complements

Goods that are used together, so a rise in demand for one increases the demand for the other.

<p><span style="background-color: transparent;">Goods that are used together, so a rise in demand for one increases the demand for the other.</span></p>
16
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Elasticity of Demand

A measure of how responsive consumers are to price changes.

<p><span style="background-color: transparent;">A measure of how responsive consumers are to price changes.</span></p>
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Elastic

Demand is elastic if quantity demanded changes significantly as the price changes.

<p><span style="background-color: transparent;">Demand is<strong> elastic</strong> if quantity demanded changes significantly as the price changes.</span></p>
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Inelastic

Demand is inelastic if quantity demanded changes little as price changes.

<p><span style="background-color: transparent;">Demand is <strong>inelastic if</strong> quantity demanded changes little as price changes.</span></p>
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Unit Elastic

Demand is unit elastic when the percentage change in price and quantity demanded are the same.

<p><span style="background-color: transparent;">Demand is <strong>unit elastic</strong> when the percentage change in price and quantity demanded are the same.</span></p>
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Total Revenue

A company’s income from selling its products.

<p><span style="background-color: transparent;">A company’s income from selling its products.</span></p>
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Total Revenue Test

A method of measuring elasticity by comparing total revenues.

<p><span style="background-color: transparent;">A method of measuring elasticity by comparing total revenues.</span></p>