CONSUMERS AND DEMAND. A. The Law of Demand 1. Demand = the amount of a good or service that consumers are willing and able to buy at different prices.

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Presentation transcript:

CONSUMERS AND DEMAND

A. The Law of Demand 1. Demand = the amount of a good or service that consumers are willing and able to buy at different prices 2. Law of demand = consumers are willing and able to buy more of a product or service as the price goes down 3. Things are not in demand when people want something but can’t pay for them 4. A demand curve - as prices go down, people are willing and able to buy more

B. Change in Demand 1. Price can affect demand 2. Availability of a product or service can affect demand 3. People’s likes and dislikes can affect demand 4. Demand curve – if it shifts to the right, it means demand has increased

THE DEMAND CURVE

C. Income and Substitute Goods 1. Income affects demand - how much money a person makes! 2. Substitute goods affect demand 3. A substitute good is a good or service that can take the place of another (these goods are “interchangeable” - demand for one will affect the other)

SUBSTITUTE GOODS

D. Complementary Goods and Demand 1. Complementary = goods and services that are often used together (ie: peanut butter and jelly; spaghetti and tomato sauce) 2. The price of the good or service of one will affect the demand for the other (ie: if the price of peanut butter goes up, the demand for jelly will drop)

COMPLEMENTARY GOODS