Law of Demand

Population

When a population increases, it is expected that demand for all kinds of goods and services will also increase. If population is large, the market is also large.

Complementary goods

flashlights and batteries, writing pads and pens (an increase in the price of flashlights will result in a decrease on the demand for batteries)

Demand Curve

The graphical representation of the demand schedule.

Taste

Consumer taste varies with age, gender, situation or need, habit, and weather.

Income

A buyer's income has a positive effect on demand.

Caused by a change in price

A change in the product's price will result to a MOVEMENT ALONG the CURVE, representing a change in quantity demanded.

Demand Schedule

A table that shows the quantity of a good that buyers would purchase at each price.

Two types of movement of the demand curve

A. Caused by a change in price B. Caused by non-price factors

Caused by Non-Price Factors

Any other changes, other than the price of the product, will result to a SHIFT to the DEMAND CURVE (a NEW demand curve will be formed)

Expectations of Buyers

If buyers expect prices of basic commodities to rise, some of them will buy more than what they need at present in order to take advantage of the lower price. Demand is also affected when buyers expect income to rise. Before the actual rise in income, expectation about future income raises present consumption.

The Law of Demand

The Law of Demand states that other things being constant, an increase in the price of a good lowers the quantity demanded of that good, while a decrease in the price of a good raises the quantity demanded of that good. Price and quantity demanded move in opposite directions.

Price of Related Goods or Commodities

The demand for a good can also be influenced by the prices of related goods

Demand

Refers to how much (quantity) of a product or service is desired by buyers at a certain period of time. There is a demand for a good or service if it gives pleasure or meets a need.

Substitute goods

beef and pork, rice and bread (an increase in the price for beef will result in an increase in the demand for pork)

A shift to the LEFT

represents a decrease in aggregate demand

A shift to the RIGHT

represents an increase in aggregate(overall) demand