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ch4s2
vocab
Term | Definition |
---|---|
law of diminishing marginal utility | states that the marginal benefit from using each additional unit of a good or service during a given time period tends to decline as each is used |
income effect | the change in consumption resulting from a change in real income |
substitution effect | when consumers react to an increase in a good's price by consuming less of that good and more of other goods |
change in quantity demanded | a change in the amount of a product that consumers will buy because of a change in price |
change in demand | when a change in the marketplace such as high unemployment prompts consumers to buy different amounts of a good or service at every price |
normal goods | products whose demand varies directly with money income |
inferior goods | goods that consumers demand less of when their incomes increase |
substitutes | goods that can be used to replace the purchase of similar goods when prices rise |
complements | goods that "go together" |