Economics Chapter 4 Section 2

Change in Quantity Demanded Change in quantity demanded- a movement along the demand curve that shows a change in the quantity of the product purchased in response to a change in price Income effect- the change in quantity demanded because of a change in price that alters consumers real income

Change in Quantity Demanded Replace a more costly event like going to a concert with a less costly event like buying a CD Substitution effect- the change in quantity demanded because of the change of the relative price of the product

Change in Demand Change in demand- people are now willing to buy different amounts of the product at the same prices= results in an entirely new curve Consumer income can cause a change in demand

Consumer Tastes Advertising, news reports, fashion trends, the introduction of new products and changes in the season can affect consumer tastes This will effect the demand curve- positively w/ good advertising or negatively as people get tired of things Inventions- good/ bad

Compliments/ Substitutes Substitutes- can be used in the place of other products- exp. Butter and margarine The demand for product tends to increase if the price of its substitute increases Complements- use of one increases the use of the other- exp- personal computer and software- Gillette razor blades The demand for complimentary products tend to do down as the price of the compliment goes up

Expectations/ # of Consumers Expectations- if people expect a product to come to the market soon it may change what they buy, or weather expectations effecting businesses Number of consumers- an increase or decrease in the number of consumers can cause a shift on the market demand curve