Law of Demand Demand- The amount of a particular good or service consumers want to buy Law of demand- as the price of a good increases the amount demanded will decrease and as price decreases then demand will increase

Diminishing Utility -the law of demand says that a lower price will increase demand but this is limited -diminishing utility -the amount of satisfaction or usefulness of a product decreases as more and more are consumed. -Ex.—You can only enjoy so many soft drinks before you can’t drink anymore no matter the price you are paying

Elasticity -Elasticity -Is the degree to which a change in price affects the demand for the product -Elastic Demand -a change in the price does affect the quantity demanded -Inelastic demand -change in the price does NOT affect the quantity demanded

Income Level Changes -The demand of many consumers is based on their income level or purchasing power -A change in either direction to a person’s purchasing power will change their demand for goods and services -personal income Income that you generate from work or other endeavors -disposable income Money that remains after all taxes on it have been paid-necessities 1st -discretionary income-money remaining after paying for necessities

Change in Consumers -The number of possible consumers in an area affects demand -Faster growth areas may face higher levels of demand -Areas of the country who are losing population will face lower demand for goods

Consumer Expectations -Many consumers plan when making economic choices and their predictions for the future change their demand -a period of high unemployment or economic boom can greatly change the demand for certain goods

Consumer Tastes -Because consumers have many choices of where to spend their money, the popularity of items will change demand -Advertisers spend billions every year to shape the “tastes” of consumers -Some items become high demand items for a short while and then very little demand

Substitute Goods -substitute goods are goods that can be used in place of another product ex.—chicken or beef -if a good experiences a price change then the substitute good will face a demand change ex—chicken price increases, demand for beef increases

Complementary Goods -complementary goods are goods that work with another product ex-cd-roms and computers -a change in the demand for one will many times affect the demand for the other as well