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Chapter 3

Chapter 3

Course Code
Jack Carr

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Chapter 3
9:10 PM
3.1 Demand
Quantity Demanded - is the total amount of any particular good or service that consumers wish to
purchase in some time period
x Desired quantity
x Refers to a flow of purchases
The amount that consumers wish to buy in a given time period is influenced by the following important
x Product's own price
x Average Income
x Prices of other products
x Tastes
x Distribution of income
x Population
x Expectations about the future
Ceteris paribus - holding all other variables constant; "other things given"
Price of a product and the quantity demanded are negatively related, other things being equal; the
lower the price, the higher the quantity demanded; the higher the price, the lower the quantity
demanded. (Law of demand)
Demand Schedule - a table showing the relationship between quantity demanded and the price of a
product, other things remaining the same
Demand Curve - graphical representation of the relationship between quantity demanded and the price
of a commodity, other things remaining the same
Demand - refers to the entire relationship between the quantity demanded of a product and the price of
that product
Factors that affect demand:
1. Average Income;
x Rise in income = expected to buy more = shift to the right
2. Prices of Other Goods;
x The lower the price, the cheaper the product becomes relative to other products that
can satisfy the same needs or desires
x Increase in the price of substitutes = shifts to the right
x Fall in the price of complements = both demands increase to the right
3. Tastes;
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