1. Ch. 4.2 Notes: Factors Affecting Demand

2. I. 2 Graphs explaining why we buy more….. A. Change in Quantity Demand = price down we buy more 1. Why? a. Income Effect = it’s cheaper and you can afford it now

3. b. Substitution Effect = as price goes down, people will buy that product over other products $4.99 $2.99 X

4. B. Change in Demand = price same but we buy more 1. Why? a. consumer tastes changes = advertising b. Our income goes up…… i. Normal Goods = Income up,buy more ii. Inferior Goods = Income down, buy more

5. c. prices of other products change …… i. Substitutes = items that replace each other * Ex. Ex. If the price of boxers increase, what happens to the demand of briefs?

6. ii. Complements = items that are used together Ex. If the price of golf clubs increase to $500 each, what happens to the demand of golf balls?

7. d. Change in expectations = when we foresee something in the future and we buy more now * Ex. Sales of Guns Soar in U.S. as Nation Weighs Tougher Limits

8. http://www.mediaza.com/MIDir/portalinfo/ PIMedia.asp?codigo=130993&panel=- 1&subpanel=140 = magazine ad rateshttp://www.mediaza.com/MIDir/portalinfo/ PIMedia.asp?codigo=130993&panel=- 1&subpanel=140