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chapter 4 (demand curve (graph showing the quantity demanded at each and…
chapter 4
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demand
the desire, ability, and willingness to buy a product
marginal utility
the extra usefulness or satisfaction a person gets from acquiring or using one more unit of a product
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diminishing marginal utility:
the decrease in satisfaction or usefulness received from each additional unit of a product
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income effect:
change in quantity demanded due to a change in the price that alters a consumer's real income
substitution effect:
a change in quantity demanded due to a change in the relative price of a product
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elasticity:
a measure of responsiveness that shows how a dependent variable such as quantity responds to an independent variable such as price
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elastic:
describes demand when a given change in price causes a relatively larger change in the quantity demanded
unit elastic:
describes demand when a given change in price causes a proportional change in the quantity demanded
the relationship between the change in price and total expenditures for an elastic demand curve is? inverse
inelastic:
describes demand when a given change in price causes a relatively smaller change in the quantity demanded
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a company decreases the price of a gallon of milk by 10% and the company's total revenue falls significantly. what term best describes the demand for milk? inelastic