law of demand vocab

demand

different quantities of goods that consumers are willing and able to buy at different prices

law of demand

inverse relationship between price and quantity demanded

ceteris paribus

latin phrases meaning all things remaining equal

purchasing power

amount of money a consumer can spend

quantity demanded

actual amount, at a particular price

demand schedule

a chart that lists quantity demanded with price

demand curve

graph of demand schedule

substitution effect

if price goes up for a product, consumer buys less of that product and more of another substitute product and vice versa

income effect

if price goes down for a product, the purchasing power increases for consumers allowing them to purchase more

law of diminishing marginal utility

states that as you consume more units of any good, the additional satisfaction from each additional unit will eventually start to decrease

normal goods

as income increases, demand increases like luxury cars or jewelry

inferior goods

as income increases, demand falls, vice versa, like top ramen or used cars