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Demand
the willingness to buy a good or service and the ability to pay for it
Law of demand
when prices go down, quantity demanded increases,. When prices go up, quantity demanded decreases.
demand schedule
a listing of how much of an item an individual is willing to purchase at each price
market demand schedule
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
state that the marginal benefit of using each additional unit of a product during a given period will decline
income effect
the change in the amount that consumers will buy because the purchasing power of their income changes
substitution effect
a change in the amount that consumers will buy because they buy substitute goods instead
change in quantity demanded
an increase or decrease in the amount demanded because of change in price
change in demand
occurs when something prompts consumers to buy different amounts at every price.
normal goods
good that consumers demand more of when their incomes rise
inferior goods
goods that consumers demand less of when their incomes rise
substitutes
goods and services that can be used in place of each other
compliments
goods that are used together, so a rise in demand for one increases the demand for the other
elasticity of demand
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
when the percentage change in price and quantity demanded are the same
total revenue
a company's income from selling its products
total revenue test
a method of measuring elasticity by comparing total revenues
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