| A | B |
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| Demand | is a willingness and ability to buy a product at a particular price |
| demand schedule | a 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 curve | a graph showing the quantity demanded at each and every price that might prevail in the market. |
| Law of Demand | more of a product will be purchased at low prices than at high ones. |
| market demand curve | the demand curve that shows how the quantity that all interested perons (the market) will demand varies depending on the price of a good or service. |
| marginal utility | the extra usefulness or satisfaction a person gets from acquiring or using one more unit of a product |
| diminishing marginal utility | the extra satisfaction we get from using additional quantities of the product begins to diminish. |
| change in quantity demanded | a movement along the demand curve that shows a change in the quantity of the product purchased in response to a change in price. |
| income effect | the change in quantity demanded because of a change in price that alters consumers’ real income. |
| substitution effect | the change in quantity demanded because of the change in the relative price of the product. |
| change in demand | consumers demand different amounts at every price, causing the demand curve to shift to the left or the right. |
| substitutes | product that can be used in place of other products. |
| complements | products that increase the value of other products; products related in such a way that an increase in the price of one reduces the demand for both. EXAMPLE MILK AND CEREAL |
| elasticity | a measure of responsiveness that tells us how a dependent variable such as quantity responds to change in an independent variable such as price. |
| inelastic | a given change in price causes a relatively smaller change in the quantity demanded. |
| unit elastic | a given change in price causes a proportional change in quantity demanded. |
| Why is a price a consumer's obstacle to buying? | Money is limited- because of scarcity, you have to make choices |
| Describe the relationship between demand schedule and demand curve? | both provide information about demand |
| A demand curve illustrates what? | quantity demanded at all possible at a given time. |
| When price increases for services and products | demand for fewer products and services |
| What creates Consumer Demand | Advertising, fashion trends, and new product introductions |
| The demand for a product is inelastic because | A modest price increse has little or no effect |
| Substitution effect | Consumers' willingness to replace a costly item with a less costly item |
| When a customer's need for a product is not really urgent, demand is | Elastic |
| microeconomics | Field of economics that deals with behavior and decision making by small units |
| What are the 3 reasons that consumer demand changes? | Consumer Income, Consumer Tastes, and Prices of related products- |
| 3 Detererminants of demand elasticity | Can purchase be delayed, adequate subsitutes available, does purchase use a large portion of income |
