complements
two goods that are used together
normal goods
goods that consumers demand more of when incomes increase
substitutes
goods used in place of one another
inferior goods
goods for which demand falls as income increases
an assumption that nothing but the price of an item will change
What is the meaning of the phrase ceteris paribus to an economist?
a change in demand
What do economists call a situation in which consumers buy a different quantity than they did before, at every price?
Immediate demand for a good will go up if its price is expected to rise.
How can expectations about the future change consumer behavior?
More people demanding goods will cause prices to rise.
How can population changes affect demand for certain goods?
If goods are used together, increase demand for one will increase demand for the other.
How can the demand for one good be affected by increased demand for another one?
a change in an area other than price
What causes a change in the demand curve or a shift in demand?
to predict how people will change their buying habits when prices change
Why does an economist create a market demand curve?
agreement on the price and the quantity traded
What is the effect of the interaction of buyers and sellers on a market?
The consumer is willing and able to buy the good or service at the specified price.
What does it mean when an economist says that a consumer has demand for a good or service?
the amount of a good that is bought
How do economists measure the consumption of a good?
Consumers buy the item as a substitute for other things.
How does the substitution effect work when the price of an item drops?
Fewer goods are bought.
If prices rise and income stays the same, what is the effect on demand?