LAWOF

Presented by:Julian Rey TiquiaTH001

DEMANDIs the quantity of a good or service that consumers are willing and able to buy at a given time period.

LAW OF DEMAND

LAW OF DEMANDThe claim that, other things equal, the quantity demanded of a good falls when the price of the good rises.

DEMAND CURVE

DEMAND CURVEAll else being equal,

as the price of a product increases, quantity demanded

falls, likewise, as the price of a product

increases, quantity demand increases.

SHIFTS IN THE DEMAND CURVE

SHIFTS IN THE DEMAND CURVE

INDIVIDUAL AND MARKET DEMAND

MARKET DEMANDIt is the sum of all individual

demands for a particular good

or service.

INDIVIDUAL DEMAND

All of the factors that determine the

quantity demanded of an individual for the

particular commodity

INDIVIDUAL DEMAND

MARKET DEMAND

INDIVIDUAL & MARKET DEMAND SCHEDULEThe quantity demanded in a market is the sum of the quantities demanded by

all the buyers.

DETERMINANTS

PRICEThe quantity demanded falls as the price rises and rises. As the price falls, we say that the quantity demanded is negatively related to the price. EXAMPLE: If the price of ice cream rose to $20 per scoop, you would buy less ice cream.

PRICE

When a fall in the price of one good reduces the demand for another good, the two goods..

A. SUBSTITUTES

EXAMPLE: Ice cream and yogurt; hotdogs and hamburgers; Sweaters and sweatshirts.

PRICE

When a fall in the price of one good raises the demand for another good, the two goods.

B. COMPLEMENTS

EXAMPLE: Shampoo and conditioner; Computers and software..

INCOMEA rise in a person’s income will lead to an increase in demand while a fall will lead to a decrease in demand for normal goods.

INCOME

A good for which, other things equal, an increase in income leads to an increase in demand.

A. NORMAL GOOD

EXAMPLE: An increase in income, makes a consumer more likely to take taxi..

INCOME

A good for which, other things equal, an increase in income leads to a decrease in demand.

B. INFERIOR GOOD

EXAMPLE: As your income falls, you are less likely to buy a car or take a cab, and more likely to ride the bus.

TASTESThe desire, emotion or preference of a good or service. When taste rise, so does the quantity demanded.

EXAMPLE: If you like ice cream, you buy more of it.

EXPECTATIONSWhen people expect that the value of something will rise, then they demand more of it.EXAMPLE: If you expect the price of ice cream to fall tomorrow, you may be less willing to buy an ice-cream cone at today’s price.

NON-PRICE DETERMINANTS

OF DEMAND

BRANDING / ADVERTISINGSuccessful advertising persuades people to buy one good over another.EFFECT: It shifts the demand curve to the right.

BRANDING / ADVERTISINGNegative Advertisements or stories by the press have the opposite effect and can cause decrease in demand.EFFECT: It shifts the demand curve to the left.

SEASON AND THE WEATHERDemand changes according to the year of the climate.EXAMPLE: Umbrellas (Rainy Season)Ice Cream (Summer)

AVAILABILITY OF INCOMEIf the amount of available buyer income changes, it alters their propensity to purchase.EXAMPLE: Income rises, demand for good quality goods rises (normal goods), while inferior goods decreases.

POPULATIONA rising population brings with it a rising levels of demand.EXAMPLE: Growing population of young people. There will be a growing demand for child health care, education and clothing due growth if birth rate.

DEMOGRAPHICSA change in the proportions of the population in different age ranges can alter demand in favor of those groups increasing in size (and vice versa).EXAMPLE: Aging Population. There will be growing demand for elderly health care, equipment and medicines.

CHANGE IN DEMAND vs.

CHANGE IN QUANTITY

CHANGE IN QUANTITY

• Refers to a change of quantity demanded as a result of price change of the good.

• Results from change in price (move along curve)

CHANGE IN DEMAND

• Means a change of the whole purchase plan. It is caused by the factors other than the change in the price of the good.

• Results from change in a non-price determinant of demand (curve moves)

REFERENCESBragg, S. (2013, May 7). Non-Price Determinants of Demand. Retrieved May 4, 2016, from Accounting Tools: http://www.accountingtools.com/questions-and-answers/what-are-the-non-price-determinants-of-demand.html

Economic Concepts. (n.d.). Retrieved May 5, 2016, from Campus Green : http://campus.greenmtn.edu/faculty/gregbrown/sc310/sc310nt1.html

Mankiw, G. (n.d.). Principles of Economics.

Non-Price Determinants of Demand. (n.d.). Retrieved May 5, 2016, from Triple A Learning: http://web.sis.edu.hk/Departments/EcoBus/microeconomics_11/page_19.htm

 

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