Law of Demand & Determinants of Demand
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The law of demand states that quantity purchased varies inversely with price. In other words, the higher the price, the lower the quantity demanded. The reason for this phenomenon is that consumers' opportunity cost increases, so they must give something else up or switch to a substitute product. The Five Determinants of Demand The five determinants of demand are: The price of the good or service. Prices of related goods or services. These are either complementary (purchased along with) or substitutes (purchased instead of). Income of buyers. Tastes or preferences of consumers. Expectations. These are usually about whether the price will go up. For aggregate demand, the number of buyers in the market is the sixth determinant.
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Law of Demand & Determinants of Demand
- 1. © Copyright by DAVE IGNACIO 1 Law of Demand Scheduling Summary Discussion
- 2. © Copyright by DAVE IGNACIO 2 Intended Learning Outcomes 1. Determinants of Demands 2. Ceteris Paribus 3. Changes in Demand
- 3. © Copyright by DAVE IGNACIO 3Reporter: Ezra Dave C. Ignacio MT32FA1 Economics, Taxation and Agrarian Reform
- 4. © Copyright by DAVE IGNACIO 4 01 03 04 05 06 Income Population Tastes and Preferences Price and Expectation Prices of Related Goods Determinants of Demand 02
- 5. © Copyright by DAVE IGNACIO 5 Income ^^^ Income vvv Goods ^^^ Goods vvv People buy more goods and services when their income increases, but will buy less if their income decreases, thus, affecting the demand for goods and services. An increase in income will either increase or decrease demand depending upon the kind of commodity. Income
- 6. © Copyright by DAVE IGNACIO 6 Population More people means more demand for goods and services. That is why; we can observe that there are more buyers in the city stores than in the barrio stores. Less population means less demand for goods and services. Business is poor in the rural areas compared to business in the urban areas.
- 7. © Copyright by DAVE IGNACIO 7 Tastes and Preferences Tastes %90 Demands for goods and services increases when people like or prefer them. Such tastes or preferences are greatly influenced by advertisements or fashion. If the certain product is out of fashion, the demand for it decreases. Preferences %75
- 8. © Copyright by DAVE IGNACIO 8 When people expect the prices of goods, especially basic commodities like rice, soap, cooking oil and sugar to increase tomorrow or next week, they will buy more of these goods and vice versa. The reason for such consumer’s behavior is to economize. This is a general tendency of buyers. Price Expectations
- 9. © Copyright by DAVE IGNACIO 9 When the price of certain goods increases, people tend to buy substitute products. Price of Related Goods
- 10. © Copyright by DAVE IGNACIO 10 Ceteris Paribus
- 11. © Copyright by DAVE IGNACIO 11 Ceteris Paribus
- 12. © Copyright by DAVE IGNACIO 12 “Assuming that the determinants of demands are constant, price and quantity demanded are inversely proportional to each other.” eteris Paribus assumes that “all other things equal or constant. C Ceteris Paribus
- 13. © Copyright by DAVE IGNACIO 13 Changes in Demand Changes in demand refer to the shift of demand curve which is brought about by the changes in the determinants of demands. In a graph an increase in demand shift the demand curve to the right while a decrease in demand shifts the demand curve to the left.
- 14. © Copyright by DAVE IGNACIO 14 Changes in Quantity Demanded It indicate the movement from one point to another point. The change in quantity demanded is brought about by changes in prices.
- 15. © Copyright by DAVE IGNACIO 15 The End
Editor's Notes
- Memory is at the centre of human living, progress and activities. Without memory, we can not remember; we can not think; we cannot learn; and we cannot solve problems. We would not be able to know danger and run away from it. We would not be able to invent Science and Technology. We would be completely blank. It would then mean that the individual would be experiencing afresh the same thing over and over again. It would be like trying to fill a bottomless pit. But with memory, we are able to store away useful information and recall them when needed. We can think and solve problems. We are able to learn, store what we have learnt and recall it for use whenever necessary. There is a two-way relationship between learning and memory. If information acquired from learning is not stored in the memory, it will be lost and so we would be unable to recall it. On the other hand, the information we have already stored in our memory, influences our new learning. To be effective, a teacher must acquaint himself with the way memory works. He must find out why children forget and be able to prevent it. He must consciously teach to promote effective storage of the material learnt by the students. This unit will therefore describe how memory works, the major reasons why we forget and the implications of these for learning and teaching.