1 Demand for Goods & Services One Variable -- Change in Price Other variables constant Another variable changes (not price) Shift in Demand Price of other.

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Presentation transcript:

1 Demand for Goods & Services One Variable -- Change in Price Other variables constant Another variable changes (not price) Shift in Demand Price of other goods Income Tastes or preferences Wealth Expectations

2 What Affects Demand for Goods & Services Price change quantity demanded changes D1 Something else changes D2 Shift in demand Q P D1 D2 p1p1 q1q1 p1p1 q1q1 p2p2 q2q2

3 Market Demand Sum of Individual Demand This is different from aggregate demand Add up demand for each individual consumer’s demand for a specific product Q P D D Q P D1 + D2 = MD MD

4 Demand Schedule Relationship between price and quantity (demanded) Elasticity – how responsive to change Utility – satisfaction, usefulness – how much D1 D2 P Q