Chapter 4: Demand

Front

What does the Law of Demand state?

Back

The quantity demanded of a product varies inversely with its price.

Front

What is represented by a movement along the demand curve?

Back

A change in the quantity demanded due to a change in price.

Front

What causes the entire demand curve to shift?

Back

A change in demand.

Front

What is marginal utility?

Back

The satisfaction received from consuming one more unit of a product.

Front

What is the income effect?

Back

A change in quantity demanded because of a change in price that makes consumers feel richer or poorer.

Front

What does it mean if demand is elastic?

Back

A change in price causes a relatively larger change in quantity demanded.

Front

What is the substitution effect?

Back

Consumers substitute an alternative less expensive product for one that has become more expensive.

Front

What happens to the demand curve when consumer tastes change?

Back

It shifts to the left or right.

Front

How is demand elasticity measured?

Back

By comparing the percentage change in quantity demanded to the percentage change in price.

Front

What effect does the availability of acceptable substitutes have on demand elasticity?

Back

It makes demand more elastic.