ECON 240 Study Guide - Midterm Guide: Substitute Good, Complementary Good, Conditional Probability
Document Summary
Derived demand- the demand for factors of production is derived from the demand for the final goods and services that they are used to produce. Human capital- labor that has been enriched by capital investment in training, health, experience, etc. Normal goods- price elasticity of demand is greater than the income-elasticity of demand; price is the most important determinant of the quantity demanded. Inferior goods- income elasticity that is greater than their price elasticity; only demand at low incomes. Superior goods- income elasticity that is greater than their price elasticity; only demand at high incomes. Income- the income of the consumer is positively related to the quantity demanded for all goods and services. Age- as incidents of poor health increase, the demand for health care also increases, but there is not a strong correlation to age-in-years. Education- people who are more highly educated demand more health but less health care because they use health care services more efficiently.