Module 5

Demand
- The different quantities of Goods and Services of consumers would be willing and able to purchase at various prices.

Law of Demand - ceteris paribus (a moment frozen in time)
- Inverse relationship between price and demand.
  - As price goes up, quantity demanded decreases.
  - As the price of a good or service drops, quantity demanded increases.
Market Demand Curve
- Downward sloping from left to right.
  - Price is on the y-axis.
  - Quantity is on the x-axis.
- A movement on the demand curve is the result of a change in price.
  - A change in price leads to a change in quantity.
Factors that shift the demand curve (not quantity demand) without a change in price ("It’s nice."):
- A shift in the demand curve is either to the right or left.
- I: Consumer income
  - Rise in income = rise in demand (and vise versa).
- T: Consumer tastes
  - Rise in consumer tastes = rise in demand (and vise versa).
- S: Substitutes - Goods that can replace each other.
  - When the price of a substitute goes up, the “main good” demand increases (and vice versa).
- N: Number of consumers
  - When the number of consumers rises, the demand increases (and vice versa)
- C: Complementary goods
  - If either goods increase or decrease, the other also increases or decreases.
- E: Future Expectations
  - If you think the price will be higher in the future, the demand will increase (now; vice versa).
- Increase in demand = shift towards the right.
- Decrease in demand = shift towards the left.
- Change in Quantity Demand vs a Change in Demand
- Change in Quantity Demand is a result of a change in price.
- Change in Demand is a result of a change in factor.

Normal Goods vs Inferior Goods
- Normal Goods:
  - Most goods.
  - Increase in income = increase of demand (of a normal good).
  - Examples:
    - Luxury goods
- Inferior Goods:
  - Decrease in income = increase of demand (of inferior goods).
  - Examples:
    - Convenience goods
Demand Schedule - Tabular representation.