Understand the factors that cause in increase/decrease in consumers’ demand of a good at all price points

 An event that increases/decreases demand reflecting a rise/drop in the quantity demanded at any given price

 T—consumer tastes  I—consumer income  R—price of related goods/services  E—consumer expectations of future prices  S—size of consumer market  3 rd variables to our graphic representation of price and quantity demanded!  Can result in an increase or decrease of demand

Vs. Normal vs. Inferior goods Normal good consumption (thus, demand) increases with a larger income Inferior good consumption (thus, demand) decreases with a larger income If you were given $1 million right now, what would you buy?

Substitutes vs. Compliments  If the rise in price of one good drives consumers to purchase an alternative good, they are said to be substitutes  If the fall in the price of one good drives consumers to purchase more of another good, they are said to be compliments

 If outlook is a drop in price, demand will decrease today  If outlook is an increase in price, demand will increase today