Demand

I. Demand
• The desire, ability, & willingness to buy a product
• How to evaluate:
- Figure out what people want
- Look at competitors & prices
- Study data and give polls/surveys to consumers
- Decide what/how much to sell & for now much

II. Demand Schedule
• List the quantity demanded & prices
- Quantity demanded is the amount of a good

III. Demand Curve
• Visual of the demand schedule
- Always is downward sloping

IV. Law of Demand
• Quantity demanded varies inversely with price
- When price goes up, quantity goes down. When price goes down, quantity goes up.

V. Market Demand
• Individual demand schedules combined
- Looks at market as a whole

VI. Marginal Utility
• Extra Usefulness you get from 1 more

VII. Principle of Diminishing Marginal Utility
• Idea that the extra satisfaction you get goes down the more you get.

Part 2
What Changes Demand?

A. Change in Quantity Demand
• The change in the number of a good based on the change in price
1. Causes
- Income effect: when prices change, your income (ability to buy stuff) does too.
- Substitution: replacement of one good (expensive) with another one (cheaper)

B. Change in Demand
• Shift of the actual curve
• Change in number of goods bought at the same price
A. Causes
1. Consumer income: more money = curve moves right and the demand goes up. Less money = demand goes down, curve moves left
2. Consumer taste: popular/trendy stuff. Demand goes up.
- Old/obsolete/out of popularity. Demand goes down.
3. Substitution: 2 products do the same job. Price goes up, demand for the other goes up.
4. Complements: two products that work together. Price for one goes up, demand for the other goes down.
5. Change in expectation: looking to the future.
6. Change in the number of consumers.