Econ vocab

Law of Demand

As the price of a good increases, the quantity demanded decreases; as the price decreases, the quantity demanded increases.

Demand

The willingness and ability of consumers to purchase a good or service at various prices.

Price Elasticity of Demand (PED)

A measure of how sensitive the quantity demanded is to a change in price.

Diminishing Marginal Utility

The satisfaction (utility) from consuming additional units of a good decreases as more of it is consumed.

Change in Demand

A shift of the entire demand curve, caused by factors other than price such as income, tastes, or substitutes.

Diminishing Personal Value

As people consume more of a good, they place less value on additional units because their needs/wants are already satisfied.

Substitute Good

A good that can replace another because it satisfies the same need.

Complementary Good

A good that is often used together with another good.

Buying Power

The amount of goods and services a consumer can purchase with their income.