Demand 2
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How is a shift in demand different from a change in quantity demanded? QD is the amount of a good or service a consumer is willing and able to purchase at each particular price at any given time. QD is notated by each separate point on the demand curve.

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Demand 2

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Demand 2

  • How is a shift in demand different from a change in quantity demanded?

    • QD is the amount of a good or service a consumer is willing and able to purchase at each particular price at any given time.

    • QD is notated by each separate point on the demand curve.

    • A shift in demand is shown as an entirely new demand curve, which is notated QD2.

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  • How is a shift in demand different from a change in quantity demanded?

    • The things that cause a shift in demand are called the determinants of demand.

      • Consumer tastes and preferences

      • Market size

      • Income

      • Prices of related goods (substitute and complementary)

      • Consumer expectations

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  • Elasticity of Demand

    • Is determined by how much a change in price affects a change in the quantity demanded for a product.

      • A change in price DOES NOT, on its own, cause a shift in demand


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  • A good is elastic if:

    • The product is not a necessity

    • There are readily available substitutes

    • The product’s cost represents a large portion of the consumer’s income


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  • Total Revenue and Elasticity of Demand

    • Total revenue ( or total receipts) is simply the price of the product times the number sold of the product (TR=P x QD)

    • If a price change causes total revenue to drop for a particular product, that product has an elastic demand

    • If the total revenue rises despite a change in price, demand for that product is inelastic

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