Contem Econ Ch 4
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Created by:
Lsangdahl Plus on October 17, 2011
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16 terms
Terms | Definitions |
|---|---|
 market | the exchange between buyers and sellers of goods and services |
| supply | the amount of goods and services available for sale |
| demand | the desire to own something and the ability to pay for it |
| law of demand | the higher the price of a product, the less of it people are willing to buy. |
| demand schedule | shows the quantities (amount) demanded of a product at various prices during a particular time period. |
| demand curve | the line charted showing the quantity(amount) purchased at a particular price. |
| real income effect | individuals cannot keep buying the same amount of an item if the price goes up and income stays the same |
| substitution effect | people tend to choose a similar product that can be used in place of the now higher-priced good or service |
| Law of Diminishing marginal utility | As the quantity of a good consumed increases the extra satisfaction gained decreases |
| market demand | the total demand by all the consumers of a given good or service |
| complements | product often used with another product |
| substitutes | goods and services that are used in place of one another |
| elasticity | consumers are more responsive to changes in the prices of some goods and services than others. |
| price elasticity demand | measures how sensitive consumers are to a change in price. |
| elastic | change in price causes a relatively large change in the quantity(amount) demanded. |
| inelastic | change in price does NOT bring much change in the quantity demanded. |
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