1. Economics Vocabulary Chapter 3
Section 1
Demand
Quantity Demanded
Law of demand
Purchasing power
Income effect
Substitution effect
Diminishing marginal utility
Demand schedule
Demand curve

2. Economics Vocabulary Chapter 3
Section 1
Demand – the amount of a good or service that a consumer is willing and able to buy at various possible prices during a given time period
Quantity Demanded – the amount a good or service that a consumer is willing and able to buy at each particular price during a given time period

3. Economics Vocabulary Chapter 3
Section 1
Law of demand – relationship between price and the quantity demanded
increase in price causes a decrease in demand
decrease in price causes an increase in demand

4. Economics Vocabulary Chapter 3
Section 1
Income effect – any increase or decrease in consumer’s purchasing power tends to decrease his or her demand
Substitution effect – describes the tendency of consumers to substitute a similar, lower-priced product for another product that is relatively more expensive
Diminishing marginal utility – utility of each unit consumed diminishes, or lessons with each additional unit

5. Economics Vocabulary Chapter 3
Section 1
Purchasing power – the amount of money or income that people have available to spend on goods and services
Demand schedule – the relationship between the price of a good or service and the quantity that consumers demand
Lists the quantity of goods that consumers are willing and able to buy at a series of possible prices
Demand curve – the relationship between the price of a product and the quantity demanded (on a graph)

6. Economics Vocabulary Chapter 3
Section 2
Determinants of demand
Substitute goods
Complementary goods

7. Economics Vocabulary Chapter 3
Section 2
Demand curve – shows the quantity of a good or service demanded at each price during a specific period of time
determinants of demand –
Substitute goods
Complementary goods

8. Economics Vocabulary Chapter 3
Section 2
Group of factors that shifts demand
Consumer tastes and preferences
Market size
Income
prices of related goods
Consumer expectations

9. Economics Vocabulary Chapter 3
Section 2
Shifts in Demand
Increase in demand
price stays the same
Quantity demanded increases
(compared to the original quantity)
Decrease in demand
Quantity demanded decreases

10. Economics Vocabulary Chapter 3
Section 2
Substitute goods – good that can be used to replace the purchase of similar goods when prices rise
Complementary goods –
Goods that are commonly used with other goods

11. Economics Vocabulary Chapter 3
Section 2
Elasticity of Demand- the degrees to which changes in a good’s price affects the quantity demanded by consumers.
2 types
Elastic demand
Inelastic demand

12. Economics Vocabulary Chapter 3
Section 2
Elastic demand
The product is not a necessity
There are readily available substitutes
The product’s cost represents a large portion of consumer’s income

13. Economics Vocabulary Chapter 3
Section 2
Inelastic demand
The product is a necessity
There are few or no readily available substitutes
The product’s cost represents a small portion of consumer’s income

14. Economics Vocabulary Chapter 3
Section 3
3 characteristics that determines if a product is elastic or inelastic
Is the product a necessity?
Does the product have a number of available substitutes?
Does the product’s cost represent a small or large portion of consumers’ income

15. Economics Vocabulary Chapter 3
Section 3
Total-revenue – also known as total receipts – refers to the total income that a business receives from selling its products.
Can businesses or manufacturers change the demand elasticity of their product to increase revenue? HOW?

16. Can a product be both elastic and inelastic at the same time?
Economics Chapter 3-3
Section 2
Can a product be both elastic and inelastic at the same time?
Give an example for yes or no