Demand 11

Demand 11 - Demand ManEc 387 Fall2011 MarkH.Hansen,PhD...

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Demand 11 Man Ec  387 Fall 2011 Mark H. Hansen, PhD Strategy Group Organizational Leadership & Strategy
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Market Demand Curve Shows the amount of a good that will be  purchased at alternative prices Law of Demand   The demand curve is downward sloping Quantity D Price 22
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Determinants of Demand Income Prices of substitutes  Prices of complements Advertising Population changes Consumer expectations 33
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The Demand Function An equation representing the demand  curve Qxd = f(Px , PY , M, H) Qxd  = quantity demand of good  X   Px  = price of good X PY  = price of a substitute good  Y M  = income 44
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The Demand Function The Demand Function is often simplified to: Qxd = a -  Px …by holding the demand shifters constant Since we usually show Price on the vertical axis, it makes sense to invert the demand function: Px = a -  Qxd 55
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Change in Quantity Demanded Price Quantity D0 A to  B :    Increase in  quantity  demanded 4 1 0 A 7 6 B 66
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What could lead to a change in  Only a change in price Why?  
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Demand 11 - Demand ManEc 387 Fall2011 MarkH.Hansen,PhD...

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