1. DEMAND

2. Demand
Demand is the desire to have some good or service and the ability to pay for it.
The law of demand states that when the PRICE of a good or service GOES DOWN, consumers buy MORE, meaning demand increases.
If price goes UP, demand should DECREASE.
The Big Bang Theory 5x05 - The Sword - YouTube

3. Demand Curve DEMAND CURVE Pt. Price of DVDs Quantity Demanded A $30 BB
$25 1 C
$20 2 D
$15 3 E
$10 4 F $5 5 B 25
DEMAND CURVE C 20 D 15 E 10 F 5 1 2 3 4 5
Quantity

4. Other Terms
Due to the law of diminishing marginal utility, people will only buy additional goods at a given time if price declines.

5. Other Terms
The Income Effect – the change in the amount a consumer will buy because their purchasing power of their income changes.
The Substitution Effect – a change in the amount that consumers will buy because they will buy substitute goods instead.

6. My Life as a Mighty Mito Mamma: Crashes and Supply and Demand
Changes in Demand
Change in Quantity Demanded is an INCREASE or DECREASE in the amount demanded because of a change in PRICE.
Change in Demand is when something prompts consumers to buy DIFFFERENT AMOUNTS of a good at every price.
My Life as a Mighty Mito Mamma: Crashes and Supply and Demand

7. Change in Quantity Demand
Price B C D
Moves along the curve E F
Quantity

8. Change in Demand Shifts left or right A A B Price B C C D D E E F F
Quantity

9. Terms
Individual Demand Curve – the demand for an individual in a specific market.
Market Demand Curve – the total demands of all individuals in a given market.
These numbers should be bigger.

10. Terms
Normal Goods – goods consumers demand more of when their income rises.
Inferior Goods – goods that consumers demand more of when their income falls.

11. Demand Changes
Change in quantity demanded is a change in PRICE or QUANTIY. This will cause you to move along the curve, up/down.
Change in demand meanwhile is a change in the AMOUNT YOU BUY. This means the curve will shift to the left or to the right. There are six factors that influence this.

12. 6 Factors for Change in Demand

13. Complements
Complements are goods that are used together, so that a rise in demand in one good will increase the demand for the other good.
If a price change occurs for the complement, it will affect the demand for the original item.

14. Substitutes
Substitutes are goods/services that can be used in place of another good or service.
If the price of a substitute changes, people may be more/less inclined to get the original item.
Examples
Pepsi or Coca Cola
Ordering Pizza or Chinese for dinner

15. Consumer Expectations
If people believe that the price of a good or service will change in the future, that may impact their decision to buy then or now.
Examples
Cars
Gas
Tickle-Me-Elmo

16. Consumer Tastes People’s tastes change overtime!
When goods are more popular, people demand more of it.
When goods lose popularity, people have less demand for it.
Advertising influences people’s tastes.

17. Market Size
The size of the market is based on the number of consumers.
If people leave a region, the market size will decrease meaning the curve will shift to the left and vice versa.
Example
People leaving Buffalo has caused a smaller market size.
More people moving to Florida and Texas has created larger market sizes in these states.

18. Income
People’s ability to buy certain goods is affected by their income.
If their income changes, then their ability to buy certain goods will change.
Less money means the curve will shift left, more money will shift the curve to the right.
More money you can buy _________ goods.
Less money you will buy __________ goods.
NORMAL
INFERIOR

19. Elasticity of Demand
Elasticity of demand is how responsive consumers are to price changes.
Elastic demand – quantity demanded will change greatly as price changes.
Inelastic demand – quantity demanded will change little as price changes.

20. Elastic Demand
Price
When demand is elastic, prices will not change much, but quantity demanded will change. 30 25
DEMAND CURVE A 20 B C 15 D E F 10 5 10 20 30 40 50
Quantity

21. Inelastic Demand
Price A
When demand is in elastic, prices will change a lot, but quantity demanded will not change much. 30 B 25
DEMAND CURVE C 20 D 15 E 10 F 5 10 20 30 40 50
Quantity

22. Factors of Elasticity Factors of elasticity are…
1. Substitutes of Goods or Services
Goods/services with few/no substitutes are inelastic as you have to pay regardless to get that item.
The more substitutes, the more elastic demand is.
2. Proportion of Income
3. Necessity or Luxury
Needs are inelastic; you’ll typically pay higher prices to satisfy these, but luxuries are elastic.