| demand function | a mathematical representation of the relation between the quantity demanded for a product and all factors that influence this demand. |
| demand curves | displays for a particular period of time how many units will be purchased at each possible price. |
| law of demand | the negative slope of the demand curve |
| elasticity of demand | measures the percentage change in quantity demanded given a percentage change in price |
| marginal revenue | the change in total revenue given a one-unit change in quantity. |
| cross-elasticity | the percentage change in quantity demanded of a good, given a percentage change in the price of some other good |
| normal goods | goods in which demand increases with income |
| inferior goods | goods for which demand declines with income |
| income elasticity | percentage change in the demand for a good given a percentage change in income |
| network effect | demand for the product increases even more because more people are using the product |
| product life cycle | the pattern in the demand for new products |
| demand estimation | managers use three basic approaches to estimate demand:
1. interviews
2. price experimentation
3. statistical analysis
all three approaches can suffer from potential serious problems. managers have to do the best they can, given imperfect information and limited resources. |
