ECON 208 Chapter Notes -Demand Curve

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23 Mar 2012
Department
Course
Professor
Adrienne Pacini ECON 208 WEEK: September 15, 2009
DEMAND, SUPPLY, AND PRICE
Demand
Quantity Demanded
- The amount of a good or service that consumers wish to purchase during some time period
- Quantity demanded: a desired quantity or purchase
- Quantity exchanged: refers to actual purchases
- Represents the flow of purchases
o The amount purchased or demanded per period of time
- The total amount of some products that consumers wish to buy in a given period is
influenced by several different factors (listed below)
Quantity Demanded and Price
- The price of a product and quantity demanded are negatively related
o The lower the price, the higher the quantity demanded (law of demand)
o As price increases, the product becomes an increasingly expensive means of
satisfying a desire
Demand Schedules and Curves
- Demand schedule: table showing the relationship between quantity demanded and the
price of a commodity (other things being equal)
- Demand curve: graphical representation of the relationship between quantity demanded
and the price of a commodity (other things being equal)
- Demand: the entire relationship between the quantity of a commodity that buyers wish to
purchase and the price of that commodity
- Shifts in the demand curve: a change in any of the variables previously held constant will
shift the demand curve to a new position (the curve can shift right or left; +/)
o Average income: if average income increases, so does the demand for normal goods
(as opposed to inferior goods)
o Prices of other goods: if the price of a substitute increases, the demand for the
other will increase; if the price of a complimentary good increases, the demand for
the other will decrease
o Tastes: long time and short-lived taste changes exist
o Distribution of income: depending on increases or decreases according to product
and income
o Population: depending if the new population has purchasing power or not,
generally the demand curve is shifted to the right when population increases
o Expectations about the future: depending if people believe that prices will rise or
fall
- Movements along the curve vs. curve shifts: movements along the demand curve are due to
a change in price only
o Change in demand: change in the quantity demanded at each possible price of
commodity, represented by a shift in the whole demand curve
o Change in quantity demanded: a change in the specific quantity of the good
demanded, represented by a change from one point on a demand curve to another
point (either on the original or on the new demand curve)
An increase in demand means that the whole demand curve shifts to the
right
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