1. Demand Microeconomics
IB economics
Demand
Microeconomics

2. Markets
Where buyers and sellers come together to carry out an economic transaction
Physical place
On-line
Product markets
Goods and services are bought and sold
Factor markets
Labor market- factors of production are bought and sold

3. Demand
Quantity of a good or service that consumers are willing and able to purchase at each given price in a given time period

4. Movement along: P and Qd change
The law of demand
As the price of a product falls, the quantity demanded of the product will usually increase, ceteris paribus.
All other things being equal
Demand curve that normally slopes downward
Movement along: P and Qd change

5. The law of demand Increase in demand
Income effect: price falls and real income increases (amount that their incomes buy)
Substitution effect: price falls and is cheaper than the competition

6. The non-price determinants of demand
Income
Normal goods: income rises demand rises
Inferior goods: income rises demand falls
Price of other products
Substitutes: price changes = demand change for other products
Complements: change in price = change in demand
Unrelated goods: change in price no effect on demand
Tastes/preferences

8. The non-price determinants of demand
Other factors
Size of the population
Changes in the age structure of the population
Changes in income distribution
Government policy changes
Seasonal changes

9. Distinction of movement on the curve and shift in demand
A change in price of the good itself leads to a movement along the demand curve.
Price change
A change in any of the other determinants of demand will always lead to a shift of the demand curve to the left or right
Quantity change at each price

10. Linear demand functions (HL)
Demand function- equation
Qd= a-bP
Qd-quantity demanded
A- quantity demanded if price was zero
P- price
B- sets slope of the curve