1. Standard
SSEMI3a.
Identify and illustrate on a graph factors that cause changes in market demand.

2. Demand Curve
Price
Quantity Demanded

3. Change in Quantity Demanded
A movement ALONG THE DEMAND CURVE that shows the change in quantity in response to a change in price.
$100
$50 20 70
100 units

4. Change in Demand
When there is a CHANGE in DEMAND: People are now willing to buy different amounts of the product at the same prices.
There are 6 factors that cause a change in demand:

5. Determinants of Demand
Just remember: N I C E S T

6. N*I*C*E*S*T Number of Consumers
The demand curve will shift as the number of consumers change.
Ex: With the U.S. population aging, demand for different products will increase

7. N*I*C*E*S*T
Changes in the amount if Income a person makes can cause a change in demand.
As income increases, demand increases
As income decreases, demand decreases

8. N*I*C*E*S*T Complements
Goods that are related and tend to be consumed or used together
The use of one increases the use of the other
Peanut butter and Jelly
Chips and dip

9. N*I*C*E*S*T Changes in Expectations
What people believe about the future
Ex: If people believe that their job or their lifestyle will experience significant change in the near future, consumer spending will likely decrease.

10. N*I*C*E*S*T Substitutes
A product can be used in place of another product.
Consumers will substitute a less expensive product if price of their chosen product increases.
You can use Splenda or Equal for Sugar

11. N*I*C*E*S*T Consumer Taste
Consumers do not always want the same things over time.
Beenie Babies, Silly bands, flip phones
iPhones, Androids

12. Marginal Utility Marginal Extra
The extra usefulness or satisfaction a person gets from acquiring or using one more unit of product
Diminishing Marginal utility: states the extra satisfaction we get from using additional quantities of the product begins to diminish
Marginal Extra

13. Vocabulary:
Market Clearing Price: the price at which the amount supplied is equal to the amount demanded
Equilibrium Price: the price at which the amount of goods producers supply meets the amount of goods that consumers demand
Equilibrium Quantity: quantity supplied and quantity demanded at the equilibrium price

14. Surplus: situation in which quantity supplied is greater than quantity demanded
Shortage: a situation in which quantity demanded is greater than quantity supplied