notebook # 11Economics 4-2

Factors Affecting Demand

Economics 4-2Factors Affecting Demand

ESSENTIAL QUESTION:

What factors might cause demand to either increase or decrease?

Economics 4-2Factors Affecting Demand

GPS STANDARDS:

SSEMI3-

a.) Identify and illustrate on a graph factors that cause changes in market supply and demand.

Factors Affecting Demand• The demand

curve is a graphical representation of the quantities that people are willing to purchase at all possible prices that might prevail in the market.

Figure 4.1The Demand for Compact DiscsFigure 4.1The Demand for Compact Discs

Factors Affecting Demand

• There are a number of factors that will cause demand to either increase or decrease.

Figure 4.1The Demand for Compact DiscsFigure 4.1The Demand for Compact Discs

Factors Affecting Demand• These

changes are usually of two types:

1. a change in the quantity demanded

2. and a change in demand.

Figure 4.1The Demand for Compact DiscsFigure 4.1The Demand for Compact Discs

Factors Affecting Demand• The change in

quantity demanded shows a change in the amount of the product purchased when there is a change in price.

Figure 4.3A Change in Quantity DemandedFigure 4.3A Change in Quantity Demanded

Factors Affecting Demand• The income

effect means that as prices drop, consumers are left with extra real income.

Figure 4.3A Change in Quantity DemandedFigure 4.3A Change in Quantity Demanded

Factors Affecting Demand• The substitution

effect means that price can cause consumers to substitute one product with another similar but cheaper item.

Figure 4.3A Change in Quantity DemandedFigure 4.3A Change in Quantity Demanded

Factors Affecting Demand• A change in

demand is when people buy different amounts of the product at the same prices.

Figure 4.4A Change in DemandFigure 4.4A Change in Demand

Factors Affecting Demand• A change in

demand can be caused by a change in income, tastes, a price change in a related product (either because it is a substitute or complement), consumer expectations, and the number of buyers.

Figure 4.4A Change in DemandFigure 4.4A Change in Demand