Demand - AP Macroeconomics

Total Revenue = $Price \times Quantity$. Calculates total income generated from sales.

Complementary goods. Price increase in one good reduces demand for its complement.

Unitary elastic demand. Percentage change in quantity equals percentage change in price.

Availability of substitutes. More substitutes make demand more responsive to price changes.

Total revenue decreases. Consumers reduce purchases significantly when elastic goods become pricier.

Total revenue increases. Consumers don't significantly reduce purchases despite higher prices.

Measure of how the quantity demanded of one good changes as the price of another good changes. Shows how demand for one good responds to another good's price.

Substitute goods. Price increase in one good boosts demand for its substitute.

Measure of how the quantity demanded changes as consumer income changes. Shows how demand responds to changes in consumer purchasing power.

Normal good. Demand increases as income rises for these goods.

Inferior good. Demand decreases as income rises for these goods.

Movement along the demand curve. Represents movement along the existing demand curve.

Shift in the demand curve. Represents movement of the entire demand curve.

Law of diminishing marginal utility. Additional utility decreases as consumption increases.

Price. Price is the dependent variable in demand analysis.

Quantity demanded. Quantity is the independent variable in demand analysis.

A table showing the quantity demanded at various prices. It displays the relationship between price levels and corresponding quantities.

A graph showing the relationship between price and quantity demanded. It visually represents the demand schedule data as a downward-sloping line.

Negative slope. Reflects the inverse relationship between price and quantity demanded.

Change in the price of the good. Only price changes cause movement along the curve, not shifts.

Change in consumer income, tastes, or prices of related goods. Non-price factors shift the entire curve left or right.

Goods that can replace each other in consumption. When one good's price rises, consumers switch to the substitute.

Goods that are consumed together. These goods have joint consumption patterns like coffee and cream.

As price decreases, quantity demanded increases, ceteris paribus. This fundamental economic principle describes the inverse price-quantity relationship.

Demand for the other good increases. Lower complement prices increase consumption of both goods together.

$E_d = \frac{% \text{change in quantity demanded}}{% \text{change in price}}$. Measures responsiveness of quantity demanded to price changes.

Elastic demand. Quantity demanded responds strongly to price changes.

Inelastic demand. Quantity demanded responds weakly to price changes.

Ceteris paribus means 'all other things being equal'. This Latin phrase ensures other variables remain constant in economic analysis.