Demand Chapter 4
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15 terms
Terms | Definitions |
|---|---|
 demand | how much you are willing and able to buy |
| law of demand | consumers will buy more of a good when its price is lower and less when its price is higher |
| substitution effect | when consumers react to an increase in a good's price by consuming less of that good and more of a substitute good |
| income effect | the change in consumption that results when a price increase causes real income to decline |
| demand schedule | a table that lists the quantity of a good a person will buy at various prices in a market |
| market demand schedule | a table that lists the quantity of a good all consumers in a market will buy at various prices |
| demand curve | a graphic representation of a demand schedule |
| ceteris paribus | a Latin phrase that means "all other things held constant" |
| normal good | a good that consumers demand more of when their incomes increase |
| inferior good | a good that consumers demand less of when their incomes increase |
| complements | two goods that are bought and used together |
| substitutes | goods that are used in place of one another |
| elasticity of demand | a measure of how consumers respond to price changes |
| inelastic | describes demand that is not very sensitive to price changes |
| elastic | describes demand that is very sensitive to a change in price |
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