Chapter 4- Demand

Term
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Quantity demanded
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Terms in this set (16)
Quantity demanded
# of units of a good that is wanted by buyers at a specific price
Demand
the relationship between price and quantity
Law of demand
The price of product goes down so the quantity demanded goes up.
Market demand
the sum of the quantities demanded by both buyers
Increase demand
Shifts to the right
Decrease demand
Shifts to the left
Income
Demand curve shifter, either normal or inferior goods.
Normal goods
Increase in INCOME causes increase in quantity
Shifts D curve to the RIGHT
ex cup noodle (loves it, keeps buying)
Inferior goods
negatively related to income
Income goes up quantity goes down
Shift D curve to the LEFT
ex cup noodle (doesn't like it, wont buy no more)
Prices of Related Goods
Either substitutes or complement shift the D curve
SubstitutesIncrease in PRICE in product A causes increase QUANTITY in product B. ex. Cake vs. Pies Cake price increases, buyers get fewer cakes and demand(Q) for pies increases.ComplementsIncrease in price of one causes a FALL in demand for the other. ex Bread goes with butter, if butter goes up you wont buy bread. Same goes for pancakes and syrup.Tasteincreases as taste of item satisfies.ExpectationsExpectations affect consumers buying DESICIONS ex If you expect a raise, you will spend more If you expect to get fired, you will spend lessSummaryPrice # of buyers income Price of related goods taste expectationsPriceIt does not shift the entire curve it goes along the curve. Price goes up so quantity goes down. Price goes down so quantity goes up.