2. Demand Schedule
• “The higher the price or the more expensive a
product is, the less quantity people are willing to
buy of the product. Conversely, the lower price of
a product, the more the consumers demand of
such product.”
- relationship between the price of a good and the
quantity of the goods that consumers are willing
to buy.
-represented by the demand curve, when plotted.
3. The Demand Curve
-graphical representation of the demand
schedule. It is a downward sloping curve.
- It shows the inverse relationship between the
price and quantity of goods that consumers
are willing to buy.
4. The demand curve, a downward sloping curve, shows the
relationship between the price of a good and the
quantity demanded. At a lower (P1), quantity
demanded is higher (Q1). At a higher price (P2),
quantity demanded is lower (Q2).
5. The Law of Downward and Sloping
Demand
• When the price of a commodity is increased (all
other things being equal), consumers tend to buy
less of the said commodity. On the other hand,
when the price is decreased (or lowered), all
other things being equal, quantity demanded for
that specific product increases.
• This is represented by a graph running
downwards to the right showing the inverse
relationship between the price of a good and the
quantity demanded of such.
6. Factors that Affect the Demand Curve
*Own Price of the Product
- The price of a product is a certain monetary
value at which the product is being sold. A
higher own price of a product decreases the
demand for such. A lower price increases the
demand. Thus, there is an inverse relationship
between the price of the product and the
quantity being demanded.
7. *Average Income
• As the Average Income of people and
households increases, the demand for specific
goods also increases.
• This is because when people have higher
incomes, they have more money to spend for
buying things.
• “Higher incomes make commodities relatively
cheaper simply because people have more
money to buy goods and services.”
8.
9. *Population Size and Demographics
• As the population increases, more people will use
commodities. As more members of the population
enter adulthood, the demand for specific products
that are being used by the specific age group also
increases, e.g., cars, cigarettes, watches, among
others.
Remember that an increase in population generally
increases the demand for most products, and changes or
shifts in population demographics will affect the demand
for specific products.
10. *Price of related goods
• Related goods can either be substitute
products or complementary products.
Substitute products
- Are commodities that decrease the use of another
product when more of these other products is
used.
.
Remember that substitute products change and move in the
opposite direction.
11.
12. Complementary products
- behave in the same direction. These are
commodities that decrease the use of another
products when less of the other complement
is used- and vice versa.
Remember that they change in the same
direction.
13.
14. *Taste of Buyers
- influences buying decisions but is more difficult to assess.
Taste, more likely than not, differs from person to person.
-Although difficult to measure, taste is very important
factor in buying decisions of consumers. It is what
marketing companies try to determine before launching a
certain product in the market by doing market research.
Marketing companies spend a lot of money on these type
of research. Why? Because in determining buyers’ tastes
may lead to disastrous mistakes in the choice of products to
offer to consumers. Likewise failure in selling or marketing
such products may also lead enormous amount of money
being wasted.
15. *Other particular factors
-Climate and weather affect the demand for
umbrellas and raincoats. Summer increases
the demand for halo-halo and ice cream.
Fiestas affect the demand for lechon, pancit
and beer.
16. The Demand Shift
• Any of the factors stated above may positively or
negatively affect the actual demand for a certain
product.
Remember that:
1. A shift to the Left corresponds to an actual
decrease to the demand;
2. A shift to the Right corresponds to an actual
increase to the demand; and
3. There is a “movement along the curve” if only
the prices of products are manipulated.
17. • The Demand Shifts. Shift to the right indicates a positive (+)
shift, or an increase in actual demand for a commodity.
Shift to the left indicates a negative (-) shift, or a decrease
in the actual demand for a commodity. Movements along
the curve are appreciated when only the prices of products
are changed. There will be no actual shift.