exexcel a level economics - definitions part 2

what is derived demand

when demand for one good is linked to demand of a related good

what is composite demand

when the good demanded has more than 1 use

what is joint demand

when goods are bought together

what are Veblen goods

luxury goods whose prices do not follow the typical economic law of supply, demand declines as it becomes more expensive

what are Giffen goods

a type of inferior good where income effect outweighs the substitution effect e.g. bread will still be bought if prices for it are high (its a staple food)

what does ceteris paribus mean

all other factors being equal

what is the income effect

when the price of the goods / services fall, can maintain same consumption for less expenditure

what is the substitution effect

when the price of the g/s falls the product is now relativly cheaper than the alternative

what is PED

a measure of the responsiveness of quantity to a change in price

what’s the formula for PED

% change in QD / % change in P