The Law of Demand

Demand Schedule

a chart which shows the link between demand and price for a consumer

Demand Curve

a graph that shows how prices affect consumer demand

Reasons that could cause an increase in demand

a product becomes more popular, a company offers a better product than its competitor, the price of the product has gone down

Law of Demand

applies to the behavior of consumers

Examples of Complementary Goods

cars and gasoline, printers and ink, electronic toys and batteries

According to the Law of Demand as prices rise

demand goes down

According to the Law of Demand as prices decrease

demand goes up

Luxuries are an example of

elastic demand

Examples of Substitute Goods

orange juice and grapefruit juice, artificial sweeteners and sugar, mittens and gloves

Factors that influence demand

Ability and willingness to purchase, substitute goods, complementary goods, elasticity

Ability and Willingness

Must have income, must need or want the goods, must have the taste and preference to want a good

Complementary Goods are

goods that are used together. If the demand for the product rises or falls, demand for its complementary goods does the same

Substitute Goods are

goods that replace other goods to meet the same consumer needs and based on price

Microeconomics

how people deal with money, time, and resources

Necessities are an example of

inelastic demand

Elastic Demand

occurs when the demand for a good changes significantly as its price changes

Inelastic Demand

occurs when the demand for an item remains the same as the price changes

Demand

the amount of a good or service consumers want

Elasticity

the measure of behaviors of producers and consumers in response to change in price