Demand is the quantity of a good or service that consumers are willing and able to buy at each price in a particular point in time #testanswer
The law of demand
There is an inverse relationship between the price of a product and the quantity of the product demanded, due to; #testanswer
Substitution effect - when a product increases in price, consumers substitute for a cheaper good
Income effect - when a product becomes more expensive, it takes up a larger portion of a consumers' income and so the consumer has less to spend on other goods
The purchasing power of income is reduced
The relationship between individual and market demand schedules and curves
The demand curve is downward sloping, labelled 'D'. X-axis is labelled as quantity, and the Y-axis as price.
The individual demand curve is;
The demand curve for an individual consumer
The market demand curve is;
The curve obtained from the horizontal summation of individual demand curves (i.e the average basically)
Factors impacting demand
Price and non-price
The effect of changes in price on quantity demanded
Movement - a movement along the curve occurs when there is a price change (increase/decrease)
Expansion in demand = decrease in price
Contraction in demand = increase in price
Label points $P_{1,}D_1$ and $P_2,D_2$, etc.
The effect of changes in non-price factors on quantity demanded
Shift - the quantity demanded of the good changes at every price due to non-price factors
Rightward shift = increase in demand
Leftward shift = decrease in demand
Label cZurves $D_{1},D_2,...$, shift is diagonal
Non-Price Factors,
Tastes and preference (changes in taste and preference towards a product)
Expectations of consumers - consumers may decrease consumption $\rightarrow$ demand if they are expecting prices to fall
Price of related - two relationships
Substitutes - for example, green to red apples - if the price of a substitute good increases, the demand of the good increases (relatively cheaper)
Complements - if the price of a complementary good increases, the demand of the good decreases as the two products tend to be purchased together - for example, phones and phone cases
Income (specifically level of disposable income)
Normal goods - As income increases, demand increases (commonsense)
Inferior goods - goods of lower quality - as income increases, people move towards higher quality substitutes away from the inferior goods, leading to a decrease in demand
Demographic factors - anything such as age, gender, socioeconomic factors - e.g. an aging population will demand more aged care services
Acronym is TEPID
For shifts, you must write at the end at every single price point #testanswer