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demand
Demand can be defined as the quantity of a particular good or service that consumers are willing and able to purchase at any given time.
The Price of the Good or service itself- except necessities.
The price of other goods and services--substitutes-complements
Changes in consumer tastes and preferences. technological progress
The level of Income The size of the population and it’s age
distribution
Ceteris paribus is an assumption used in economics to isolate the relationship between two economic variables. It is a latin phrase that means öther thing being equal
In other words we assume all other factors that could effect demand remain constant.
1-3 pg 78
Price (£)
Quantity Demanded (000s)
Demand
£10
£5
100 150
The demand curve slopes downwards from left to right (a negative slope) indicating an inverse relationship between price and the quantity demanded. Quantity demanded will be higher at lower prices than at higher prices. As price falls, quantity demanded rises. As price rises, quantity demanded falls.
Price (£)
Quantity Demanded (000s)
Demand
£10
£5
100 150
Contraction of demand is when an increaseIn the price of a good or service causes a decrease in quantity demanded it is shown by an upward movement along the demand curve
Price (£)
Quantity Demanded (000s)
Demand
£10
£5
100 150
Contraction of demand is when an decrease in the price of a good or service causes an increase In quantity demanded. It is shown by a downward movement along the demand curve
The level of demand – ◦ determines where on the graph it sits
Low demand – ◦ nearer the origin
High demand – ◦ further from the origin (assuming same scale)
Dependent on a variety of factors Demand curve moves in response
to changing factors
Factors influencing demandD = f (Pn,Pn…Pn-1, Y, T, P, A, E)
Where: Pn = Price Pn…Pn-1 = Prices of other goods – substitutes
and complements Y = Incomes – the level and distribution
of income T = Tastes and fashions P = The level and structure of the population A = Advertising E = Expectations of consumers
Changes in any of the factors other than price causes the demand curve to shift either:
Left (Less demanded at each price) or Right (More demanded at each price)
Price ($)
Quantity Demanded (000s)
Demand
£10
100
D1
D2
10 200
Changes in any of the factors affecting demand other than price cause the entire demand curve to shift to the left (less demanded at each price) or to the right (more demanded at each price).
Price ($)
Quantity Demanded (000s)
Demand
$10
100
D1
D2
10 200
An increase in demand means Consumers are willing and able to buy more of the product at each possible price
$5
An increase in demand also means that consumers to buy a given number at a higher price
Price ($)
Quantity Demanded (000s)
Demand
£10
100
D1
D2
10 200
Consumers are willing and able to buy less of aProduct at each possible price
Consumers demand less of the product
Consumers are willing and able o buy a given quantity at a lower price then before
Pg 81 and 82
