Unit I: Demand

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Demand can be shown in two ways:

A demand schedule shows how price relates to quantity.
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A demand curve shows the demand schedule on a graph. An increase in demand shifts the curve to the right while a decrease in demand shifts the curve to the left.

Image result for demand curve
Demand is the quantities that people are willing and able to buy at various prices.

The law of demand states that there is an inverse relationship between price and quantity demanded. This means as price increases, quantity demanded decreases. Likewise, as price decreases, quantity demanded increases.
Image result for the law of demand

Δ in price is what causes a "change in quantity demanded" (ΔQD).

There are five determinants that can cause a "change in demand" (ΔD):

Δ in number of buyers (population)
Δ in buyer's taste (preference, advertisements)
Δ in income (inferior goods, normal goods)

  • Inferior goods are goods people buy less of when their income rises.
  • Normal goods are goods people buy more of when their income rises.
Δ in the price of related goods (substitute goods, complementary goods)
  • Substitute goods are goods that serve roughly the same purpose to buyers.
  • Complementary goods are goods that are often consumed together.
Δ in expectations

For more information, refer to these videos on Khan Academy:








Comments

  1. Stephen B.September 6, 2019 at 12:48 AM

    These notes were very useful for knowing everything that comes with demand. The inverse relationship between the price and quantity of oranges was well represented by the graph.

    ReplyDelete

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