1. Introduction to Demand

2. Components of Demand Demand Price and Quantity Quantity Demanded
Law of Demand
Determinants of Demand

3. Demand
Demand is on overall indication of a consumers (buyers/purchasers) desire and ability to purchase a given good or service.
This means that if you DO NOT have BOTH a desire and ability to purchase a good or service, you DO NOT HAVE DEMAND FOR THAT THING (You’re not “in the market”)
Demand is not SPECIFIC!!!
Demand itself does NOT change due to a change in PRICE OR QUANTITY of the good or service
Demand is expressed by a line on a graph (Demand Curve)
Demand is from the consumers (buyers/purchasers) perspective

4. Price and Quantity Specific PRICES are marked along the vertical axis.
Specific QUANTITIES are marked along the horizontal axis.
The intersection of PRICE and QUANTITY creates a specific QUANTITY DEMANDED
Any time there is a change in price or quantity, there will be a corresponding change in quantity demanded, and thus, if quantity demanded has changed, there must have been a change in either price or quantity.

5. Quantity Demanded
Quantity Demanded is a specific quantity of goods and services demanded at a specific price
Quantity Demanded changes in response to changes in price
There is an inverse relationship between the two (Law of Demand)
Quantity Demanded moves along the demand curve (each point represents QD, or a specific quantity demanded at a specific price)
Calculated using a Demand Schedule (Table)

6. The Law of Demand Ceteris Paribus = “All things held constant”
Law of Demand = All things held constant (ceteris paribus), as PRICE (P) increases, QUANTITY DEMANDED (QD) will decrease (and vice versa)
For demand, price and quantity have an inverse relationship

7. The Demand Curve
The DEMAND CURVE is a function that shows the inverse relationship between price and quantity (Law of Demand)
The demand curve ALWAYS SLOPES DOWN (and to the right)
The demand curve is basically a “best fit” line demonstrating this relationship (instead of plotting every specific price and quantity of a good or service sold in that market)

8. Determinants of Demand
Determinants of Demand shift the ENTIRE demand curve left or right
Determinants of Demand
Income
Taste and Preferences
Substitute Goods
Complimentary Goods
# of buyers (Population/size of the market)
Consumer Information Available
Future Price Expectations