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Demand Curves

Demand Curves. Price and Quantity Demanded And The Determinants of Demand Ms. Gray – University H.S. What is a demand curve?. A demand curve is a series of relationship points (coordinates) between two variables—Price and Quantity.

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Demand Curves

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  1. Demand Curves Price and Quantity Demanded And The Determinants of Demand Ms. Gray – University H.S

  2. What is a demand curve? • A demand curve is a series of relationship points (coordinates) between two variables—Price and Quantity. • The curve shows an inverse relationship, because when one variable goes up, the other one decreases. Thus the slope of a demand curve is downward-sloping, or negative.

  3. Change in Quantity Demanded • A change in PRICE will always result in a change in quantity demanded. Note that this is different than a change in demand. • When price changes, it moves from one point on the demand curve to another point on the SAME DEMAND CURVE. Since it is price that changes on the Y axis, it will cause a change in the quantity people want to buy.

  4. Changes in Quantity Demanded (cont’d.) • In economics, we put the independent variable (price) on the Y axis, and the dependent variable (quantity) on the X axis.

  5. Quantity Demanded So, at a higher price, people will buy less quantity of a good. And people will buy more quantity of a good at a lower price. Remember the Law of Demand: “People will buy more of a good as the price falls.”

  6. But what happens if something changes besides price? • When some factor besides price changes, it will affect people’s decision to buy the good regardless of the price. • When that occurs, we call it a change in demand. That means that the entire demand curve will shift, either to the right, if the factor causes people to buy more, or to the left if the factor causes people to buy less.

  7. A shifting demand curve looks like this:

  8. Demand Determinants Anything that can shift the entire curve is called a demand determinant. Sometimes we call them “demand shifters” for simplicity. The list of determinants, or demand shifters, is one that you have to memorize, but it is not too difficult.

  9. Demand Determinants Changes in: • Tastes and preferences • Number of buyers • Buyers’ income • Inferior goods • Normal goods • Price of related goods • Substitutes • Complements • Expectations about future prices

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