Demand
Hello everyone! Today, we will explore an important concept in economics:
Demand.
quantity demanded: the amount of a good that buyers are willing and able to
purchase
quantity demanded: represents the amount of a good that buyers are willing
and able to purchase at different prices.
law of demand: other things equal, the quantity demanded of a good falls when
the price of the good rises
Now, let's look at the Demand Schedule, which is a table that shows the
relationship between the price of a good and the quantity demanded. From this
table, we can observe that as the price increases, the quantity demanded
decreases, which aligns with the Law of Demand.
demand schedule: a table that shows the relationship between the price of a
good and the quantity demanded (kiem hinh table)
Then we have the Demand Curve, which is a graph that represents the
relationship between price and quantity demanded. As we can see, the demand
curve slopes downward from left to right, illustrating the Law of Demand: the
higher the price, the lower the quantity demanded.
demand curve: a graph of the relationship between the price of a good and the
quantity demanded (kiem 1 graph co demand curve)
Market Demand versus Individual Demand
market demand: the sum of all the individual demands for a particular good or
service
market demand curve: shows how the total quantity demanded of a good
varies as the price of the good varies
Shifts in the Demand Curve
the demand curve shifts: when something happens to alter the quantity
demanded at any given price
an increase in demand: any change that increases the quantity demanded at
every price, shifts the demand curve to the right
a decrease in demand: any change that reduces the quantity demanded at
every price shifts the demand curve to the left
There are many variables that can shift the demand curve. Here are the most
important.
a. Income
A lower income have less to spend in total have to spend less on some,
probably most goods.
** If the demand for a good falls when income falls, the good is called a
normal good.
** If the demand for a good rises when income falls, the good is called an
inferior good. Example: bus rides
b. Prices of Related Goods
Example: the price of hot dog falls buy more hot dogs will probably buy
less hamburgers because hot dogs and hamburgers are both satisfy similar
desires.
When a fall in the price of one good reduces the demand for another
good, the two goods are called substitutes.
Example: the price of gasoline buy more gasoline will buy more
automobiles because gasoline and automobiles are often used together.
When a fall in the price of one good raises the demand for another
good, the two goods are called complements.
c. Tastes
The most obvious determinant of your demand is your tastes. Economists
normally do not try to explain people’s tastes because tastes are based on
historical and psychological forces that are beyond the realm of economics.
d. Expectations
Your expectations about the future may affect your demand for a good or
service today.
** If you expect to earn a higher income next month, you may choose to save
less now and spend more of your current income buying ice cream.
** If you expect the price of ice cream to fall tomorrow, you may be less
willing to buy an ice-cream cone at today’s price.
e. Number of Buyers
In addition to the preceding factors, which influence the behavior of individual
buyers, market demand depends on the number of these buyers.
Summary
The demand curve shows what happens to the quantity demanded of a good
when its price varies, holding constant all the other variables that influence
buyers. When one of these other variables changes, the demand curve shifts.
A curve shifts when there is a change in a relevant variable that is not measured
on either axis. Because the price is on the vertical axis, a change in price
represents a movement along the demand curve. By contrast, income, the prices
of related goods, tastes, expectations, and the number of buyers are not
measured on either axis, so a change in one of these variables shifts the demand
curve.
Shifts in Curves versus Movements along Curves:
Example: Hot weather increase the demand for ice cream and drive up the
price the quantity of ice cream that firms supply rises even though the
supply curve remains the same
In this case, economists say there has been an increase in “quantity
supplied” but no change in “supply.”
Supply refers to the position of the supply curve
The quantity supplied refers to the amount suppliers wish to sell
Supply does not change because the weather does not alter firms’ desire to sell
at any given price.
The hot weather alters consumers’ desire to buy at any given price shifts the
demand curve to the right increases in demand causes the equilibrium
price to rise.
When the price rises, the quantity supplied rises. This increase in
quantity supplied is represented by the movement along the supply
curve.
** A shift in the supply curve is called a “change in supply”
** A shift in the demand curve is called a “change in demand.”
** A movement along a fixed supply curve is called a “change in the quantity
supplied”
** A movement along a fixed demand curve is called a “change in the quantity
demanded.”
A Change in Market Equilibrium Due to a Shift in Supply
