Demand Price and Quantity Quantity Demanded Law of Demand Determinants of Demand Demand Demand is on overall indication of a consumers buyerspurchasers desire and ability to purchase a given good or service ID: 748711
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Slide1
Introduction to DemandSlide2
Components of Demand
Demand
Price and Quantity
Quantity Demanded
Law of Demand
Determinants of DemandSlide3
Demand
Demand is on overall indication of a consumers (buyers/purchasers)
desire
and
ability
to purchase a given good or service
.
This means that if you
DO NOT
have
BOTH
a desire and ability to purchase a good or service, you
DO NOT HAVE DEMAND FOR THAT THING
(You’re not “in the market”)
Demand is not SPECIFIC
!!!
Demand itself does
NOT
change due to a change in
PRICE OR QUANTITY
of the good or service
Demand is expressed by a
line on a graph
(Demand Curve
)
Demand is from the consumers (buyers/purchasers)
perspectiveSlide4
Price and Quantity
Specific
PRICES
are marked along the vertical axis.
Specific
QUANTITIES
are marked along the horizontal axis.
The intersection of
PRICE and QUANTITY
creates a specific
QUANTITY DEMANDED
Any time there is a change in price or quantity, there will be a corresponding change in quantity demanded, and thus, if quantity demanded has changed, there must have been a change in either price or quantity.Slide5
Quantity Demanded
Quantity Demanded
is a
specific quantity
of goods and services demanded at a
specific price
Quantity Demanded
changes in response to changes in price
There is an
inverse relationship
between the two (Law of Demand)
Quantity Demanded moves
along
the demand curve (each point represents QD, or a specific quantity demanded at a specific price)
Calculated using a
Demand Schedule
(Table)Slide6
The Law of Demand
Ceteris Paribus = “All things held constant”
Law of Demand
= All things held constant (ceteris paribus), as
PRICE (P)
increases,
QUANTITY DEMANDED (QD)
will decrease (and vice versa)
For demand, price and quantity have an
inverse relationshipSlide7
The Demand Curve
The
DEMAND CURVE
is a function that shows the
inverse relationship
between price and quantity (Law of Demand)
The demand
c
urve
ALWAYS SLOPES DOWN
(and to the right)
The demand curve is basically a “best fit” line demonstrating this relationship (instead of plotting every specific price and quantity of a good or service sold in that market)Slide8
Determinants of Demand
Determinants of Demand
shift the
ENTIRE
demand curve left or right
Determinants of Demand
Income
Taste and Preferences
Substitute Goods
Complimentary Goods
# of buyers (Population/size of the market)
Consumer Information Available
Future Price Expectations