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Mr. Smith
Chapter 4 Terms
Terms | Definitions |
---|---|
demand | the desire to own something and the ability to pay for it |
law of demand | consumers buy more of a good when its price decreases and less when its price increases |
substitution effect | when consumers react to an increase in a good's price by consuming less of that good and more of other goods |
income effect | the change in consumption resulting from a change in real income |
demand schedule | a table that lists the quantity of a good a person will buy at each different price |
market demand schedule | a table that lists the quantity of a good all consumers in a market will buy at each different price |
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 used in place of one another |
elasticity of demand | a measure of how consumers react to a change in price |
inelastic | describes demand that is not very sensitive to a change in price |
elastic | describes demand that is very sensitive to a change in price |
unitary elastic | describes demand whose elasticity is exactly equal to 1 |
total revenue | the total amount of money a firm receives by selling goods or services |