Products that are usually consumed jointly (for example, lamps and light
bulbs). An increase in the
price of one will cause the demand for the other to fall.
The difference between the maximum amount a consumer would be willing to
pay for a unit of a good and the payment that is actually made.
That part of an increase in amount consumed that is the result of the
consumer's real income (the consumption possibilities available
to the consumer) being expanded by a reduction in the price of a
good.
The percent change in the quantity of a product
demanded divided by the percent change in consumer
income. It measures the responsiveness of the demand for
a good to a change in income.
Goods for which the income elasticity is negative. Thus, an increase in
consumer income causes the demand for such a good to decline.
The percent change in the quantity of a product demanded divided by the
percent change in its price. Price elasticity of demand
indicates the degree of consumer response to
variation in price.
Products that are related such that an increase in the price of one will
cause an increase in demand for the other (for example,
butter and margarine, Chevrolets and Fords).
That part of an increase in amount consumed that is the result of a good
being cheaper in relation to other goods because of a reduction
in price.
The constraint that separates the bundles of goods that the consumer can
purchase from those that cannot be purchased, given a limited
income and the prices of products.
The constraint that separates the consumption
bundles that are attainable from those that are unattainable. In
a money income economy, it is usually called a budget
constraint.
A curve, convex from below, that separates the consumption bundles that
are more preferred by an individual from those that are less
preferred. The points on the curve represent combinations of
goods that are equally preferred by the individual.
The change in the consumption level of one good that is just sufficient to offset a unit change in
the consumption of an other good without causing a shift to
another indifference curve. At any point on an indifference
curve it will be equal to the slope of the curve at that point.
