MICROECONOMICS 7TH EDITION BY JEFFREY
M PERLOFF 2026 COMPLETE STUDY GUIDE A+
◉ inferior goods. Answer: goods sensitive to purchasing power;
indirect relationship with income; as income increases, the demand
for these goods decreases; as income decreases, the demand for
these goods increases
◉ demand. Answer: different quantities of goods that consumers are
willing and able to buy at different prices
◉ law of demand. Answer: there is an indirect relationship between
price and quantity demanded
◉ substitution effect. Answer: if the price goes up for a product,
consumers will buy less of that product and more of another
substitute product
◉ substitutes. Answer: goods that are used in place of one another;
direct relationship
◉ complements. Answer: two goods that are bought and used
together; inverse relationship
, ◉ income effect. Answer: if the price goes down for a product, the
purchasing power increases for consumers -- allowing them to
purchase more
◉ law of diminishing marginal utility. Answer: as you consume
anything, the additional satisfaction you receive from each
additional unit will eventually decrease
◉ law of diminishing marginal utility and law of demand. Answer:
the law of diminishing marginal utility causes the inverse
relationship as consumers are willing to pay more for a unit that
offers them the most benefit, while the amount they demand and are
willing to pay for decreases as it does not offer as much utility
◉ market demand. Answer: the demand of the entire population
(add the market - adding the individual demands)
◉ 5 shifters of demand. Answer: 1. Tastes and Preferences
2. Number of Consumers
3. Price of Related Goods
4. Income
5. Future Expectations (how will what happens in the future, impact
demand right now)
M PERLOFF 2026 COMPLETE STUDY GUIDE A+
◉ inferior goods. Answer: goods sensitive to purchasing power;
indirect relationship with income; as income increases, the demand
for these goods decreases; as income decreases, the demand for
these goods increases
◉ demand. Answer: different quantities of goods that consumers are
willing and able to buy at different prices
◉ law of demand. Answer: there is an indirect relationship between
price and quantity demanded
◉ substitution effect. Answer: if the price goes up for a product,
consumers will buy less of that product and more of another
substitute product
◉ substitutes. Answer: goods that are used in place of one another;
direct relationship
◉ complements. Answer: two goods that are bought and used
together; inverse relationship
, ◉ income effect. Answer: if the price goes down for a product, the
purchasing power increases for consumers -- allowing them to
purchase more
◉ law of diminishing marginal utility. Answer: as you consume
anything, the additional satisfaction you receive from each
additional unit will eventually decrease
◉ law of diminishing marginal utility and law of demand. Answer:
the law of diminishing marginal utility causes the inverse
relationship as consumers are willing to pay more for a unit that
offers them the most benefit, while the amount they demand and are
willing to pay for decreases as it does not offer as much utility
◉ market demand. Answer: the demand of the entire population
(add the market - adding the individual demands)
◉ 5 shifters of demand. Answer: 1. Tastes and Preferences
2. Number of Consumers
3. Price of Related Goods
4. Income
5. Future Expectations (how will what happens in the future, impact
demand right now)
