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