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demand
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quantities consumers are willing and able to buy at various prices during a given time period
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microeconomics
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branch of economic theory that deals with behavior and decision making by small units such as individuals and firms
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demand schedule
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listing showing the quantity demanded at all possible prices that might prevail in the market at a given time
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incentive
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something that motivates
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demand curve
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graph showing the quantity demanded at each and every possible price that might prevail in the market at a given time
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law of demand
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rule stating that more will be demanded at lower prices and less at higher prices; an inverse relationship between price and quantity demanded
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market demand curve
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demand curve that shows he quantities demanded by everyone who is willing and able to purchase a product at all possible prices at one moment in time
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marginal utility
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additional satisfaction or usefulness obtained from acquiring or consuming one more unit of a product
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diminishing marginal utility
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decrease in additional satisfaction or usefulness as additional units of a product are required
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change in quantity demanded
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movement along demand curve showing that a different quantity is purchased in response to a change in price
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income effect
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that portion of a change in quantity demanded caused by a change in consumers income when the price of a product changes
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substitution effect
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the portion of a change in quantity demanded that is due to a change in the relative price of the good
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change in demand
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different amounts of a product are demanded at every price, causing the demand curve to shift to the left or to the right
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substitutes
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competing products that can be used in a place of another; products related in such a way that an increase in the price of one increases the demand for the other
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complements
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products that increase the use of other products; products related in such a way that an increase in the price of one reduces the demand for both
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elasticity
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a measure of responsiveness that tells us how a dependent variable, such as quantity demanded or quantity supplies, responds to a change in an independent variable such as price
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demand elasticity
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the extent to which a change in price causes a change in the quantity demanded; demand elasticity has 3 cases; elastic, inelastic, or unit elastic
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elastic
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type of elasticity in which a change in the independent variable results in a larger change in the dependent variable
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inelastic
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case of the demand elasticity where the percentage change in the independent variable causes a less than proportionate change in the dependent
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unit elastic
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elasticity where a change in the independent variable generates a proportional change of the dependent variable
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market demand schedule
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is a table that lists the quantity of a good all consumers in a market will buy at each different price.
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Ceteris Paribus
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a Latin phrase that means "all other things held constant"
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income
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Changes in consumers increases affect demand.
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Normal good
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a good that consumers demand more of when their incomes increases
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inferior good
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a good that consumers demand less of when their incomes increases
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consumer expectations
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whether or not we expect a good to increase or decrease in price in the future greatly affects our demand for that good today
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Population/number of consumer
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Change in the Sizes of the population also affects the demand for most products
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Price of related goods
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substitutes and complements
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