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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.

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