Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.
income effect normal good inferior good income elasticity necessity good luxury good income expansion path Engel curve substitution effect total effect Giffen good substitute complement | The percentage change in the quantity consumed of a good in response to a 1% change in income. A normal good for which income elasticity is between zero and 1. The change in a consumer’s consumption choices that results from a change in the purchasing power of the consumer’s income. A curve that connects a consumer’s optimal bundles at each income level. A good with an income elasticity greater than 1. The change in a consumer’s consumption choices that results from a change in the relative prices of two goods. A good that can be used in place of another good. A good for which consumption rises when income rises. A good for which consumption decreases when income rises. A curve that shows the relationship between the quantity of a good consumed and a consumer’s income. The total change (substitution effect + income effect) in a consumer’s optimal consumption bundle as a result of a price change. A good for which price and quantity demanded are positively related. A good that is purchased and used in combination with another good. |