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16 Cards in this Set
- Front
- Back
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complement
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two goods that are used together
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substitutes
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goods used in place of one or another
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elastic demand
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large change in demand for a small change in price
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substitution effect
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consumers react to an increase in price of a good by consuming less of that good and more of other goods
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income effect
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change in consumption resulting from a change in real income
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inelastic demand
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small change in demand for a small change in price
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what consumer behavior should a supplier expect when raising prices into an inelastic market?
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most consumers will continue to buy at about the same level as before the price increase
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what is not a component of the definition of demand?
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the use for the good
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what are the components of the definition of demand?
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desire to buy
the ability to pay |
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what does elasticity of demand measure?
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how buyers will cut back or increase their demand when price rises or falls
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the law of the demand is best stated as
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the inverse relationship between demand and price
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an increase in demand is shown on the demand curve as a
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shift to the right
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T/F in general, the slope of a demand curve is up to the right
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FALSE
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T/F suppliers engage in advertising in order to increase demand
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TRUE
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T/F when the price of a good increases, the demand for a complementary good generally decreases
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TRUE
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T/F skis and snowboards are complementary products
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FALSE
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