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Unformatted text preview: r good, the effects of
changes in income are in the opposite direction to
those described above.) Decrease in Increase in demand demand
demanded D1 D0
D2 0 Quantity When the price of the good changes, there is a movement
along the demand curve and a change in the quantity
demanded, shown by the blue arrows on demand curve D0.
When any other influence on buyers’ plans changes, there
is a shift of the demand curve and a change in demand. An
increase in demand shifts the demand curve rightward (from
D0 to D1). A decrease in demand shifts the demand curve
leftward (from D0 to D2).
animation Review Quiz ◆
4 5 Define the quantity demanded of a good or service.
What is the law of demand and how do we
What does the demand curve tell us about the
price that consumers are willing to pay?
List all the influences on buying plans that
change demand, and for each influence, say
whether it increases or decreases demand.
Why does demand not change when the price
of a good changes with no change in the other
influences on buying plans?
Work Study Plan 3.2
and get instant feedback. 9160335_CH03_p053-080.qxd 60 6/22/09 8:56 AM Page 60 CHAPTER 3 Demand and Supply ◆ Supply
If a firm supplies a good or service, the firm
1. Has the resources and technology to produce it,
2. Can profit from producing it, and
3. Plans to produce it and sell it.
A supply is more than just having the resources and
the technology to produce something. Resources and
technology are the constraints that limit what is
Many useful things can be produced, but they are
not produced unless it is profitable to do so. Supply
reflects a decision about which technologically feasible items to produce.
The quantity supplied of a good or service is the
amount that producers plan to sell during a given
time period at a particular price. The quantity supplied is not necessarily the same amount as the
quantity actually sold. Sometimes the quantity supplied is greater than the quantity demanded, so the
quantity sold is less than the quantity supplied.
Like the quantity demande...
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