| Term
| Definition
|
| 1. Law of Demand
| a. a concept specifying the different quantities of an item that will be bought at different prices.
|
| 2. Market demand curve
| b. shows the various quantities demanded of a particular product at all prices that might prevail in the market at a given time.
|
| 3. Demand curve
| c. a graph showing the quantity demanded at each and every price that might prevail in the market.
|
| 4. Demand
| d. states that the quantity demanded varies inversely with its price.
|
| 5. Demand schedule
| e. shows the quantities demanded by everyone who is interested in purchasing the product.
|
| Discussion
1.Do you buy more of an item when the price goes down, or less of it when the price goes up? How does this illustrate the concept of demand?
2.How do you react to a change in the price of an item? How is this behavior shown on the demand curve?
3.If the prices of some commodities or services drop, consumers will be better able and more willing to buy them. How does this situation reflect the Law of Demand?
4. How does the market demand curve reflect the Law of Demand?
| |
| 6. Complements
| f. the extra usefulness or additional satisfaction a person gets from acquiring or using one more unit of a product.
|
| 7. Inelastic
| g. the principle which states that the extra satisfaction we get from using additional quantities of the product begins to decline.
|
| 8. Elasticity
| h. products that can be used in place of other products.
|
| 9. Elastic
| i. related products that increase the use of the other.
|
| 10. Substitutes
| a. a measure of responsiveness that shows how one variable responds to a change in another variable.
|
| 11. Marginal utility
| b. type of elasticity where a change in price causes a relatively larger change in quantity demanded
|
| 12. Diminishing marginal utility
| c. type of elasticity where a change in price causes a relatively smaller change in quantity demanded.
|
| Discussion
1.How does the principle of diminishing marginal utility explain the price we pay for another unit of a good or service?
2.What are the examples of substitutes? What happens with the demand for a product if the price of its substitute goes up? What happens with the demand for a product if the price of its substitute goes down?
3.What are the examples of complements? What does an increase in the price of one good usually lead to in the demand for its complement?
| |
| | | | |
