Chapter 4

Chapter 4 - Chapter 4 9/20/07 Demand indicates how much of...

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Chapter 4 – 9/20/07 Demand – indicates how much of a good consumers are both willing and able to buy at each possible price during a given period, other things constant Law of demand – says that quantity demanded varies inversely with the price, other things constant Subsitution effect of price change – subsitituting one good for another because it’s price has dropped in comparison to other prices. Money income – the number of dollars received per period Real income – income measured in terms of what you can buy Income effect of a price change – increases the amount of the good you are able to buy with your real income Demand curve – a curve showing the relation between the price of a good and the quantity demanded during a given period Quantity demanded – the amount demanded at a particular price as reflected by a point on a given demand curve Indidvidual demand – the demand of an individual consumer Market demand – sum of the individual demands of all consumers in the market
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Chapter 4 - Chapter 4 9/20/07 Demand indicates how much of...

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