Economics Chapter 4 2
Terms
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- microeconomics
- deals with behavior and decision making by small units, such as individuals and firms
- demand schedule
- a listing that shows the various quantities demanded of a particular product at all prices that might prevail in the market at a given time
- demand curve
- a graph showing the quantity demanded at each and every price that might prevail in the market
- law of demand
- states that the quantity demanded of a good or service varies inversely with its price *price and quantity move in different directions
- market demand curve
- demand curve that shows the quantities demanded by everyon who is interested in purchasing the product
- marginal utility
- extra usefulness or satifscation a person gets from acquiring or using one more unit of a product
- diminishing marginal utility
- statese that the extra satisfaction we get from using additional quantities of the product begins to diminish --the las unit consumed gives less satisfaction than the one before it
- substitution effect
- the change in quantity demanded because of the change in the relative price of the product
- change in demand
- demand curve shifts==> has noting to do with price
- substitutes
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products that can be used in place of other
example- buying chicken instead of steak - complements
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use of one increases the use of the other
example -hot dogs and hot dog rolls - pricing determines:
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1)factors of production
2) financial capital
3) diminishing marginal utility