economics vocabulary chapter 3 section 1 demand quantity demanded law of demand purchasing power...
TRANSCRIPT
Economics Vocabulary Chapter 3 Section 1
Demand
Quantity Demanded
Law of demand
Purchasing power
Income effect
Substitution effect
Diminishing marginal utility
Demand schedule
Demand curve
Economics Vocabulary Chapter 3 Section 1
Demand – the amount of a good or service that a consumer is willing and able to buy at various possible prices during a given time periodQuantity Demanded – the amount a good or service that a consumer is willing and able to buy at each particular price during a given time period
Economics Vocabulary Chapter 3 Section 1
Law of demand – relationship between price and the quantity demanded • increase in price causes a
decrease in demand• decrease in price causes an
increase in demand
Economics Vocabulary Chapter 3Section 1
Income effect – any increase or decrease in consumer’s purchasing power tends to decrease his or her demand
Substitution effect – describes the tendency of consumers to substitute a similar, lower-priced product for another product that is relatively more expensive
Diminishing marginal utility – utility of each unit consumed diminishes, or lessons with each additional unit
Economics Vocabulary Chapter 3Section 1
Purchasing power – the amount of money or income that people have available to spend on goods and services
Demand schedule – the relationship between the price of a good or service and the quantity that consumers demand• Lists the quantity of goods that consumers are
willing and able to buy at a series of possible prices
Demand curve – the relationship between the price of a product and the quantity demanded (on a graph)
Economics Vocabulary Chapter 3 Section 2
Determinants of demand
Substitute goods
Complementary goods
Economics Vocabulary Chapter 3Section 2
Demand curve – shows the quantity of a good or service demanded at each price during a specific period of time
determinants of demand –
Substitute goods
Complementary goods
Economics Vocabulary Chapter 3Section 2
Group of factors that shifts demand
• Consumer tastes and preferences
• Market size• Income• prices of related goods• Consumer expectations
Economics Vocabulary Chapter 3Section 2
Shifts in Demand• Increase in demand
price stays the same
Quantity demanded increases
(compared to the original quantity)
• Decrease in demandprice stays the same
Quantity demanded decreases
(compared to the original quantity)
Economics Vocabulary Chapter 3Section 2
Substitute goods – good that can be used to replace the purchase of similar goods when prices rise
Complementary goods –
Goods that are commonly used with other goods
Economics Vocabulary Chapter 3 Section 2
Elasticity of Demand- the degrees to which changes in a good’s price affects the quantity demanded by consumers.
2 types• Elastic demand• Inelastic demand
Economics Vocabulary Chapter 3 Section 2
Elastic demand• The product is not a necessity• There are readily available
substitutes• The product’s cost represents
a large portion of consumer’s income
Economics Vocabulary Chapter 3 Section 2
Inelastic demand• The product is a necessity• There are few or no readily
available substitutes• The product’s cost represents
a small portion of consumer’s income
Economics Vocabulary Chapter 3Section 3
3 characteristics that determines if a product is elastic or inelastic
• Is the product a necessity?• Does the product have a number of available
substitutes?• Does the product’s cost represent a small or
large portion of consumers’ income
Economics Vocabulary Chapter 3Section 3
Total-revenue – also known as total receipts – refers to the total income that a business receives from selling its products. Can businesses or manufacturers change the demand elasticity of their product to increase revenue? HOW?
Economics Chapter 3-3Section 2
Can a product be both elastic and inelastic at the same time?
Give an example for yes or no