Demand Curve
Demand- is the quantities that people are willing and able to buy at various prices.
The Law of Demand- there is an inverse between price and quantity demand
P↑Q↓
What causes change in demand?
1. change in buyers taste (advertisement)
2. change in the # of buyers (population)
3. change in income (normal goods, inferior goods)
- Normal goods- goods that buyer buy more of when there income rise
- Inferior goods- goods that buyers buy less of when there income rises
4. change in the price of related goods
- substitute goods- goods that serve roughly the same purpose (ex. Coke and Pepsi)
- complimentary goods- goods that are often consumed together (ex. fries and ketchup)
Elasticity Demand
- elastic demand- a product that is elastic when demand will change quickly give small change in price (ex. steak, fur coat)
- inelastic demand- a product to say it is elastic if your demand for it will not change in price (e. milk, gas, medicine)
- Uni-elastic (ex. salt)
Your note is very in details and easy to understand. The graph shows the example of the inverse relationship between price supply and demand which makes it more logically understandable :)
ReplyDeleteThe blog is well organized and easy to understand! The examples make it easy to identify how economics plays part in our daily purchases and economy.
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