January 13th, 2015

Demand

Demand Schedule:

Demand Curve

Demand Increase: Curve shifts right

Demand Decrease: Curve shifts left

Demand: The quantities that people are willing and able to buy at various prices.

The Law of Demand: There is an inverse relationship between price and quantity demanded. As price decreases quantity increases.

·         ∆ in price is caused by ∆ in quantity demanded

       ∆ in Demand is caused by:

       5 Determinents of Demand

1.    ∆ in buyers taste- (advertising)

2.    ∆ in number of buyers- (population)

3.    (∆ in income)-

1.    Normal goods: Goods that buyers buy more of when their income rises.

2.    Inferior goods: Goods that buyers buy less of when their income rises.

4.  ∆ Of price of related good:

       1. Substitute goods: Goods that serve roughly the same purpose to buyers (Ex: Coke & Pepsi)

       2. Complimentart goods: Goods that are often consumed together (Ex: Cars & Gas)

5.  ∆ in expectations- Thinking of the future