MACROECONOMICS CHAPTER 3 CRT
Demand Curve
Depicts relationship between price and quantity demanded
Expectations
If prices are expected increase in future, demand will increase in order to avoid high prices
Income
If your income increases, you typically buy more of each type of product
Number of Buyers
Number of babies being born has dropped significantly, therefore the demand of baby food decreases
Ceteris Paribus
Only look at the change between two variables; everything else is held constant
Substitutes
Products that are similar should increase the same way. Pepsi increases, Coke Increases
Complements
Products that work well together, Golf balls and golf clubs, hot dogs and mustard
Tastes of Products
Recognizing trends, increasing number of popular product. Increase (curves to right) Decrease (Curves to left)
Demand
Represents the choice making behavior of buyers
Demand Schedule
Shows the quantities of a good or service that people are willing to buy at different prices
Law of Demand
There is an inverse relationship between the price of a good and the quantity buyers are willing to purchase in a defined time period
Inferior goods
as your income increases, you buy less of product