DEMAND

DEMAND The desire, ability, and willingness to buy a product.

Law of Demand Price and demand are inverse. As price goes up = demand goes down As price goes down = demand goes up

DEMAND SCHEDULE A listing that shows corresponding prices and quantities demanded.

Mr. Lawson’s Demand Schedule for a Blu-Ray PRICE QUANTITY DEMANDED $50 $40 $30 $20 $10 $5 0 1 2 3

DEMAND CURVE Demand schedule in graph form

Mr. Lawson’s Demand Curve for a Blu-Ray $50 $40 $30 $20 $10 $5 $0 0 1 2 3

Changes in Demand Causes demand curve to SHIFT to the right or left.

Change in Demand $50 $40 $30 $20 $10 $5 $0 0 1 2 3

Causes for Change in Demand? Consumer Income Consumer Taste Substitutes Complements Change in Expectations Number of Consumers

Consumer Income If consumer’s incomes increase they are able and willing to buy more products If consumer’s incomes decrease they are less likely to buy products. Ex.: When our unemployment rate is low, our economy strives.

Consumer Tastes Advertising, news reports, fashion trends, and changes in the season have an affect on demand Ex: In the month of October, people tend to buy items that are pink…

Substitutes Products that can be used in place of other products. Ex.: when the price of Coca-Cola goes up, the demand for Pepsi goes up.

Complements An item that increases the use of another product. Ex.: When the price of blu-ray players goes down, consumers buy more blu-ray players and blu-rays.

Change in Expectation Change in what people expect in the future. Ex.: the iPhone 5 was announced in June. That caused the demand for iPhone 4/4s to go down. Ex.: consumers might wait until Black Friday to buy a product they know will be on sale.

Number of Consumers An increase in the number of consumers will change the demand for an item.