The Bottom Line!!!

Price does NOT shift the curve left or right just changes the point where we are ON the demand curve.

• Price & Quantity

Demanded allows us to create the curve.

Law of Demand

As price goes up, the quantity demanded goes down.

The amount that people want to buy changes when the price goes up or down.

• Price and Quantity Demanded are inversely related. (that means opposite)

The Determinants of Demand

When forces OUTSIDE of price are involved in changing demand, (called Demand Determinants) they are so POWERFUL, they will cause the curve to MOVE.

The Job of

The Demand Determinants

• cause the entire curve to SHIFT to the

RIGHT OR LEFT

. This is called a Change in OVERALL demand

• If demand goes UP, the curve will move

RIGHT.

• If demand goes DOWN the curve WILL

SHIFT LEFT.

LEFT = LESS

The 5 Determinants of. Demand

These Determinants are Shifters of the Demand Curve

Change in Consumer

Taste/ Attitude

This happens when consumers' attitude about a product changes.

• There are many examples: fashion, tachnology, media, etc.

Change in Consumer Income

Income. The moncy you make at your job or from investments and other sources

When consumers income changes, their demand for goods/services change.

• This is known as the income effect.

What happens when people make more money?

Consumers purchase normal goods.

• Definition Normal

Goods: A good you buy MORE of when you have MORE money

•

• Non-necessities

• Example: Luxury

Goods

What happens when you make

LESS money?

When consumers have more income LESS money the buy MORE of other goods.

• These goods are called

Oodie

Top Ramen

ORIENTAL FL

inferior goods.

• Definition Inferior

Goods: A good you buy

MORE of when you have LESS money

Change in the Price of a

Complementary Good

Complementary Goods are 2 goods that you would buy together

• If the price of one goes up, the demand for the other goes.down.

• Exansple: if the price of hotdogs went UP, the demand for the buns would go DOWN

Change in the Price of a

Substitute Good

• Substitute goods are goods that can replace each other.

• When the price of one goes up, the demand for the other goes UP.

Change in # Buyers

• If the population goes up, the demand for goods gocs up.

• If people moved out of an area, demand for goods and services would decrease.

Diminishing Marginal Utility

• Marginal: additional

• Utility: satisfaction

• Diminishing. decreasing

• As you consume more and more of any good in a period of time, you become less and less satisfied