4-1
Change in Quantity Demanded & Changes in price have a _____________ relationship.
Inverse
can be used in place of other products
Substitutes
when a change in price causes a relatively larger change in quantity demanded
Elastic Demand
when a given change in price causes a relatively smaller change in quantity demanded
Inelastic Demand
when a given change in price causes a proportional change in quantity demanded
Unit Elastic
listing showing the quantity demanded at all possible prices that might prevail in the market at a given time
Demand Schedule
a change that is graphically represented as a movement along the demand curve
Change in Quantity Demanded
a measure of responsiveness that describes the way a dependent variable changes in response to a change in an independent variable
Elasticity
the characteristics of ______________________ are the desire, ability, and willingness to buy a product
Demand
the part of economic theory that deals with behavior and decision making by individual units, such as people and firms
Microeconomics
On a demand curve, movement along the curve, as opposed to a shift in the entire curve, is a result of what?
A Change in Price
the change in quantity demanded because of a change in price that alters consumers’ income
Income Effect
What test do economists use to measure elasticity?
Total Expenditure
the change in quantity demanded because of a shift in relative prices
Substitution Effect
rule stating that more will be demanded at lower prices and less at higher prices
Law of Demand
graph showing the quantity demanded at each and every possible price that might prevail in the market at a given time
Demand Curve
What happens to the demand curve for pork today if swine flu is expected to hit the area barns in 3 months?
What is the determinant?
Demand Curve shifts right (increases)
Determinant: Expectations
Demand will shift left
Determinant: Income
products related in such a way that an increase in the price of one reduces the demand for both
Complements
demand curve that shows the quantities demanded by everyone who is willing and able to purchase a product at all possible prices at one moment in time
Market Demand Curve
additional satisfaction or usefulness obtained from acquiring or consuming one more unit of a product
Marginal Utility
What are the SIX factors that can shift the demand curve?
Taste/Preference, Income, Population, Substitutes, Complements, Expectations
Price Quantity
$7 6
$10 5
Calculate the Elasticity of Demand. Is it elastic, inelastic, or unit elastic?
0.38
Inelastic
decrease in additional satisfaction or usefulness as additional units of a product are acquired
Diminishing Marginal Utility
What are the three questions that help determine elasticity?
Can the Purchase be Delayed?
Are Adequate Substitutes Available?
Does the Purchase Use a Large Portion of Income?