Willingness and ability to buy. Quantity varies inversely to Price.
The Law of Demand
Quantity demanded rises as price falls, other things constant
Quantity demanded falls as price rises, other things constant
The graphic representation of the relationship between price and quantity demanded. As price goes up Demand goes down.
Refers to a schedule of quantities of a good that will be bought per unit of time at various prices, other things constant.
Refers to a specific amount that will be demanded per unit of time at a specific price other things constant.
movement along the demand curve
the graphical representation of the effect of a change in price on the quantity demanded.
shift in demand
the graphical representation of the effect of anything other than price on demand.
Shift Factors of Demand
1. Society's income.
2. The prices of other goods.
5. Taxes on and subsidies to consumers.
1. Rise in income
Rise in demand. more money more nice stuff.
Price of other goods
When price of a good declines, the demand for its compliment increases.
Rockshows or TV
If you expect the price to fall you may post pone purchasing until later.
Taxes and Subsidies
Taxes cause a decrease in demand for goods with tax.
Subsidies cause an increase in demand by giving a tax holiday, or other.
Market Demand Curve
Is the horizontal sum of all individual demand curves.
Market Demand Phenomena
1. At lower prices, existing demanders buy more.
2. At lower prices, new demanders enter the market.
Law of Supply
Quantity supplied rises as price rises, other things constant.
Quantity supplied falls as price falls, other things constant.
The graphical representation of the relationship between price and quantity supplied. As one increases the other increases.
Refers to a schedule of quantities a seller is willing to sell per unit of time at various prices, other things constant.
Refers to a specific amount that will be supplied at a specific price.
Movement along a supply curve
The graphical representation of the effect of a change in price on the quantity supplied.
Shift in supply
the graphical representation of the effect of a change in a factor other than price on supply.
Shift Factors of Supply
1. Price of Inputs
4. Taxes and Subsidies
Price of Inputs
Supply falls when price of inputs rises. If costs rise substantially a firm might even shut down.
Advances in Technology increase supply.
Expectations can increase or decrease supply depending. If prices expected to be higher later. Supplier may take some product off the shelf for sale later. Decreasing supply now and increasing it later.