Law of demand
States that consumers buy more of a good when its price decreases and less when its price increases
Substitution effect
Occurs when consumers react to an increase in a goods price by consuming less of that good and more of other goods
Income effect
Happens when a person changes his or her consumption of goods and services as a result of a change in real income
Demand schedule
Is a table that lists the quantity of a good person will buy at each different price
Market demand schedule
Is a table that lists the quantity of a good all consumers in a market will buy at each different price
Normal good
Is a good that consumers demand more of when their incomes increase
Inferior good
Is a good that consumers demand less of when their income increases
Complements
Are 2 goods that are bought and used together
Substitutes
Are goods uses in place of one another
Inelastic
Demand for a good that consumers will continue to buy despite a price increase
Elastic
Demand for a good that is very sensitive to changes in price