Vocab
when price goes up, demand goes
down
When we get rich we consume less of
inferior goods
the desire to own something and the ability to pay for it
demand
Nike holds a BOGO sale. People react by buying more than normal. This action is an example of
the law of demand
Grape juice and cranberry juice are what kinds of goods, relative to each other
substitutes
When goods are essential, there are no substitutes, and less of our income is spent on it, it is considered to be
inelastic
An example of an inelastic good could be...
Answers will vary but must demonstrate that the demand is insensitive to price change
a graph of a demand schedule
demand curve
What stays the same when you change an individual demand schedule into a market demand schedule for the same product?
price of the product
normal goods
the reason why medicine and gasoline are inelastic is because...
there are few substitutes available OR they are essential
the demand schedule is
a list of the quantity of a good that a person will buy at different prices
two goods that are bought and used together
compliments
when a consumer reacts to the price of one good by consuming more or less of another good
substitution effect
Name the 6 things that shift demand
expectations, income, population, demographics, ads and tastes, prices of related goods
How do we calculate the total revenue for a business?
multiply the price by the quantity demanded/sold
These 2 things change when you switch your demand schedule from covering an individual to a business
quantity demanded & number of consumers
the income effect is
people feel poorer when prices for goods increase
The factors that influence consumer buying choices in the law of demand are
substitution and income effect
the latin phrase for "all other things held constant"
ceteris paribus
When prices go up total revenue goes up for this kind of good
inelastic
the law of demand states that demand has this kind of relationship with price
inverse