Unit 2 AP Microeconomics; Supply and Demand

Markets

• institutions or mechanisms which bring together buyers and sellers

Demand

• amount of a good or service that a consumer is willing to buy at a series of prices in a given time period

Quantity Demanded

• only affected by a change in the price of that good/service

Law of Demand

• as price increases, quantity demanded decreases; as price decreases, quantity demanded increases, other things equal

• on demand graph: price on y-axis, quantity on x-axis

Individual vs. Market Demand

• each consumer has their own demand for a product

• the market demand curve is the sum of all of the individual demand curves

Determinants of Demand (TRIBE)

• factors that will actually shift the demand curve

  • Tastes and Preferences of the consumer

  • Related goods’ prices (substitutes, compliments)

  • Income of the consumer

  • # of Buyers

  • Expectations (about price) of the consumer