15 terms

Economics- Chapter 4 notes

Law of demand
consumers buy more of a good when its price decreases and less when its price increases
demand curve
a graph of the relationship between the price of a good and the quantity demanded. it is always downward sloping
marginal utility
(economics) the amount that utility increases with an increase of one unit of an economic good or service
diminishing marginal utility
the principle that our additional satisfaction, or our marginal utility, tends to go down as more and more units are consumed
Al must exist for there to be a demand
1. a want to buy the product
2. an ability to buy the product
3. a willingness to buy the product
are on the horizontal axis
are listed on the vertical axis
demand schedule
A table that shows the relationship between the price of a good and the quantity demanded
market demand schedule
a table that lists the quantity of a good all consumers in a market will buy at each different price
change in the quantity demand
change in quantity demand is a change within the quantity of a good that people plan to buy that results from a change in the price of the good
change in demand is change in the quantity that people plan to buy when any influence other than the price of the good changes
income effect
the change in consumption that results when a price increase causes real income to decline
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
change in demand
consumers demand different amounts at every price, causing the demand curve to shift to the left or the right
caused by change in
1. income
2. taste
3. price
4. consumer expectations
5.number of buyers
factors that affect change in quantity demanded
1. diminishing marginal utility
2. income effect amount person buys based on income
3. substitution effect increase in price
factors that affect a change in demand
1. consumer income
2. consumer taste
3. substitutes
4. compliments
5. change in expectations
6. number of consumers