Unit 2 slides - Demand the amount are consumers to willing...

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- Demand - the amount consumers are willing to buy at various prices or able . v Supply . the ammount of goods or services producers are willing to sell at various prices - Supply and demand work in a market - Voluntary exchange - the point where consumers and producers set the price - supply and demand make up a voluntary exchange - law of demand - price and demand move in opposite directions - Created by the willingness and ability to purchase - explains how people react to prices - Relationship between price and quantity demanded : - Real income effect - individuals can't Keep buying products if prices rise and income stays the same - inflation isn't bad if inflation and income rise at the same time - Substitution effect - if two items satisfy the Same need and the price of one rises people will buy more of the Other ( effects demand ) - Law of Diminishing Marginal Utility # ah 's faction ) - an economic rule that States that the more a person buys of a product the less satisfaction they have with that product What else effects demand ? 1) Population changes - as population increases and decreases so does demand 2) Changes in income - if income decreases 1 increases so does demand 3) Changes in task and preference - if something increases in popularity the demand goes upl if something decreases in
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