This means that This means that demand curves slope demand curves slope

This means that this means that demand curves slope

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This means that This means that demand curves slope demand curves slope downward. downward.
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OTHER PROPERTIES OF DEMAND CURVES Demand curves intersect the quantity ( X )-axis, as a result of time limitations and diminishing marginal utility. Demand curves intersect the ( Y )- axis, as a result of limited incomes and wealth.
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INCOME AND WEALTH Income is the sum of all households wages, salaries, profits, interest payments, rents, and other forms of earnings in a given period of time. It is a flow measure. Wealth , or net worth , is the total value of what a household owns minus what it owes . It is a stock measure.
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RELATED GOODS AND SERVICES Normal Goods are goods for which demand goes up when income is higher and for which demand goes down when income is lower. Inferior Goods are goods for which demand falls when income rises.(Demand decrease when consumer income rises Eg: Public transportation-When consumer income is low, people use the bus, when economy grow, people buy cars instead)
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RELATED GOODS AND SERVICES Substitutes are goods that can serve as replacements for one another; when the price of one increases, demand for the other goes up. Perfect substitutes are identical products. Complements are goods that “go together”; a decrease in the price of one results in an increase in demand for the other, and vice versa.
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SHIFT OF DEMAND VERSUS MOVEMENT ALONG A DEMAND CURVE A change in A change in demand demand is is not the same as a change not the same as a change in in quantity demanded quantity demanded . . In this example, a higher In this example, a higher price causes lower price causes lower quantity demanded quantity demanded . . Changes in determinants Changes in determinants of demand, other than of demand, other than price, cause a change in price, cause a change in demand demand , or a , or a shift shift of the of the entire demand curve, from entire demand curve, from D D A to to D D B . .
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When demand shifts to the right, demand increases. This causes quantity demanded to be greater than it was prior to the shift, for each and every price level. A CHANGE IN DEMAND VERSUS A CHANGE IN QUANTITY DEMANDED
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A CHANGE IN DEMAND VERSUS A CHANGE IN QUANTITY DEMANDED To summarize : Change in price of a good or service leads to Change in quantity demanded ( Movement along the curve ). Change in income, preferences, or prices of other goods or services leads to Change in demand ( Shift of curve ).
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THE IMPACT OF A CHANGE IN INCOME Higher income decreases the demand for an inferior good Higher income increases the demand for a normal good
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THE IMPACT OF A CHANGE IN THE PRICE OF RELATED GOODS Price of hamburger rises Demand for complement good (ketchup) shifts left Demand for substitute good (chicken) shifts right Quantity of hamburger demanded falls
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FROM HOUSEHOLD TO MARKET DEMAND Demand for a good or service can be defined for an individual household , or for a group of households that make up a market .
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  • Fall '18
  • Daniel Underwood

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