Economics Vocabulary Chapter 4
Terms
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- area of economics that deals w/behavior and decision making by small units
- microeconomics
- extra satisfaction we get from using additional quantities of the product begins to diminish
- diminishing marginal utility
- the extra usefulness or satisfaction a person gets from acquiring or using one more unit of a product
- marginal utility
- listing that shows the various quantities demanded of a particular product at all prices that might prevail in the market at a given time
- demand schedule
- graph showing the quantit demanded at each and every price that might prevail in the market
- demand curve
- states that the quantity demanded of a good or service varies inversely w/its price
- law of demand
- demand curve that shows the quantities demanded by everyone who is interested in purchasing the product
- market demand curve
- movement along the demand curve that shows a change in the quantity of the product purchased in response to a change in price
- change in quantity demanded
- the change in quantity demanded because of a change in price that alters consumers' real income
- income effect
- change in quantity demanded because of the change in the relative price of the product
- substitution effect
- products that can be used to replace other products
- substitutes
- use of one increasses the use of the other
- complement
- measure of responsiveness that tells us how a dependent variable such as quantity responds to a change in an independent variable such as a price
- elasticity
- the extent to which a change in price causes a change in the quantity demanded
- elastic
- a given change in price causes a relatively smaller change in the quantity demanded
- inelastic
- a given change in price causes a proportional change in quantity demanded
- unit elastic