Microeconomics Exam 1 Erhardt
Demand - a relationship btw the price of a good and the quantity that consumers are willing and able to
buy during a given period
Law of Demand - The quantity of a good demanded during a given period relates inversely to its price
Subject effect of a price change - when the price of a good falls, consumers sub that good with other
goods, which become more relatively expensive
ex: OJ and cranberry juice
Money Income - the number of dollars a person receives per period; such as $400 per week
Real Income - Income measured in terms of the goods and services it can buy. Ie: eating out and bakers
dilemma- costs more to deliver b/c of gas
Income effect of a price change - a fall in the price of a good, increases consumers' real income making
consumers more able to purchase goods; for a normal good, the quantity demanded increases.
Demand Curve - a curve showing the relationship btw the price of a good and the quantity demanded
during given period
Quantity Demanded - The amt demanded at a particular price, as reflected by pt on a given demand
curve
Market Demand - sum of the individual demands of all consumers in the market
, Normal Good - a good (ie new clothes) for which demand increases or shifts rightward as consumer
increase rises
Inferior Good - a good (ie used clothes) for which demand increases, or shits leftward, as consumer
incomes rise
Substitutes - goods, (Coke and Pepsi) that when one increases in price, the demand for the other one
shifts rightward
Complements - goods (milk and cookies) related in such a way that an increase in the price of one shifts
the demand for the other one leftward
Tastes - consumer preferences; likes and dislikes in consumption; assumed to be constant along a given
demand curve
Movement along a demand curve - change in quantity demanded resulting from a change in the price of
the good
Shift of a Demand Curve - movement of a demand curve right of left resulting from a change in one of
the determinants of demand other than the price of the good
Supply - a relationship between the price of a good and the quantity that producers are willing and able
to sell during a given period (o.t.c
Law of Supply - the quantity of a good supplied during a given period is usually directly related to its
price (o.t.c.)
Demand - a relationship btw the price of a good and the quantity that consumers are willing and able to
buy during a given period
Law of Demand - The quantity of a good demanded during a given period relates inversely to its price
Subject effect of a price change - when the price of a good falls, consumers sub that good with other
goods, which become more relatively expensive
ex: OJ and cranberry juice
Money Income - the number of dollars a person receives per period; such as $400 per week
Real Income - Income measured in terms of the goods and services it can buy. Ie: eating out and bakers
dilemma- costs more to deliver b/c of gas
Income effect of a price change - a fall in the price of a good, increases consumers' real income making
consumers more able to purchase goods; for a normal good, the quantity demanded increases.
Demand Curve - a curve showing the relationship btw the price of a good and the quantity demanded
during given period
Quantity Demanded - The amt demanded at a particular price, as reflected by pt on a given demand
curve
Market Demand - sum of the individual demands of all consumers in the market
, Normal Good - a good (ie new clothes) for which demand increases or shifts rightward as consumer
increase rises
Inferior Good - a good (ie used clothes) for which demand increases, or shits leftward, as consumer
incomes rise
Substitutes - goods, (Coke and Pepsi) that when one increases in price, the demand for the other one
shifts rightward
Complements - goods (milk and cookies) related in such a way that an increase in the price of one shifts
the demand for the other one leftward
Tastes - consumer preferences; likes and dislikes in consumption; assumed to be constant along a given
demand curve
Movement along a demand curve - change in quantity demanded resulting from a change in the price of
the good
Shift of a Demand Curve - movement of a demand curve right of left resulting from a change in one of
the determinants of demand other than the price of the good
Supply - a relationship between the price of a good and the quantity that producers are willing and able
to sell during a given period (o.t.c
Law of Supply - the quantity of a good supplied during a given period is usually directly related to its
price (o.t.c.)
