Demand And Change In Demand


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Demand And Change In Demand

  1. 1. Demand <ul><li>The desire, ability and willingness to buy a product </li></ul><ul><ul><li>in order for demand to be counted in the market place, wanting a product must coincide with the ability and willingness to pay for it </li></ul></ul><ul><li>Demand is a microeconomic concept </li></ul><ul><ul><li>the part of the economy that deals with behavior and decision making by small units, such as individuals and firms </li></ul></ul>
  2. 2. The Demand Schedule <ul><li>a listing that shows the quantity demanded at all prices that might prevail in the market at a given time </li></ul><ul><ul><li>PRICE VS. QUANTITY DEMANDED </li></ul></ul><ul><ul><li>Market and Individual </li></ul></ul>
  3. 3. The Law of Demand <ul><li>The demand for an economic product varies inversely with its price </li></ul><ul><ul><li>As price increases, demand decreases and vice versa </li></ul></ul>
  4. 4. The Demand Curve <ul><li>A graphic depiction of the points corresponding to a demand schedule </li></ul><ul><ul><li>also illustrates the quantity that consumers will demand at each and every price </li></ul></ul><ul><li>Downward sloping </li></ul><ul><ul><li>Represents the law of demand and diminishing marginal utility </li></ul></ul>
  5. 5. Changes in Demand <ul><li>A change in the quantity demanded is a change in the quantity of the product purchased in response to a change in its price </li></ul><ul><ul><li>movement along the demand curve </li></ul></ul><ul><ul><li>this is different than a change in demand </li></ul></ul><ul><ul><ul><li>movement of the entire curve </li></ul></ul></ul>
  6. 6. INCOME <ul><li>As your income goes up, you could buy more of a product at the same price (I get a raise) </li></ul><ul><ul><li>demand curve shifts out to the right </li></ul></ul><ul><li>If your income went down, you would have a tendency to buy less of a product at the same price (I get fired) </li></ul><ul><ul><li>demand curve shifts in to the left </li></ul></ul>
  7. 7. Consumer Tastes <ul><li>Popularity may increase because of fads, friends, or the media </li></ul><ul><ul><li>Subway, Beanie Babies, movies, etc. </li></ul></ul><ul><ul><li>Increase in demand at every price so curve shifts to the right </li></ul></ul><ul><li>Popularity may decrease due to loss of interest by media, friends, etc. </li></ul><ul><ul><li>Decrease in demand at every price so curve shifts to the left </li></ul></ul>
  8. 8. Substitutes <ul><li>Substitute Goods – products that can be used for another </li></ul><ul><ul><li>if the price of I-pods increased, it could increase the demand for generic MP3 Players at the same price </li></ul></ul><ul><ul><li>shift Demand Curve for generic MP3 Players out to the right and for I-Pods to the left </li></ul></ul><ul><ul><li>in general, the demand for a product increases if the price of its substitute goes up (and vice versa) </li></ul></ul>
  9. 9. Complimentary Goods <ul><li>Goods that are used with one another </li></ul><ul><ul><li>if the price of a Swiffer mop goes down, the demand for Swiffer mops,pads, and liquid will increase </li></ul></ul><ul><ul><ul><li>shift the demand curve for Swiffer mops,pads, and liquid out to the right </li></ul></ul></ul><ul><ul><li>in general, a decrease in the price of one good usually leads to an increase in demand for its compliment (and vice versa) </li></ul></ul>