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