Chapter 5 Econ Alive

 Demand is the actual curve that shows what buyers are willing to buy at a range of prices  Quantity Demanded is the number of buyers willing to buy something at a specific price

 1 st you need a demand schedule  Demand Schedule: table showing quantity demanded at different possible prices Demand for Burgers Price $Quantity Demanded $1100 $280 $360 $440 $520 $60

 2 nd set up the graph  Horizontal (x) axis is your quantity demanded  Vertical (y) axis is your price PRICE $ Quantity Demanded

 3 rd plot the points from your demand schedule on your graph PRICE $ Quantity Demanded

 Demand Curve: downward sloping line that shows various quantities demanded at different prices Generic Demand graph

 What customers want to buy, and what they are willing to pay changes due to many factors:  Changes in population  Changes in income  Changes in tastes/preferences  Price of substitutes  Price of complementary goods  Change in Consumer Expectations

 A change in demand (NOT Quantity Demanded) means a change in the demand curve, causes the curve to shift right or left  Increase in Demand Shift to the right  Decrease in Demand Shift to the left

 As population increases, demand increases  As population decrease, demand decreases

 As income increases, demand increases  As income decreases, demand decreases

 If something becomes a fad, demand increases  If something loses popularity, demand decreases

 If the price of a substitute decreases, demand for original product decreases  If price of a substitute increases, demand increases

 If the price of a complement increases, demand decreases  If the price of a complement decreases, demand increases

 Consumers will change their buying behavior based on what they think will happen  If they think the price will go up soon, they will buy more now and demand will increase  If they think the price will decrease soon, they will wait until the price decrease and demand will decrease

 Elasticity: concept dealing with consumers’ responsiveness to an increase or decrease in price  Price elasticity of demand: concept that deals with how much demand varies according to a change in price

 Situation in which the rise or fall of a product’s price greatly affects the quantity demanded that consumers are willing to buy

 Situation in which a product’s price change has little affect on the quantity demanded

 3 factors  Existence of substitutes  Portion of budget spent on a item  time to adjust