* Demand represents the maximum quantity of a particular good that consumers are willing and able to buy during a specified time period. The fundamental character of the concept of demand is the relationship between the price of a good and the maximum quantity that is demanded and is described by the Law of Demand.

* There are two types of Demand: * 1. A change in a quantity demanded * A. The Income Effect- the change in quantity demanded because of a change in price that alters the consumer’s real income. * B. The Substitution Effect- is the change in quantity demanded because of the change in the relative price of the product.

* 1. A change in quantity demanded: * We can also use this demand curve to see the effect of a change in the price of the product: as the price of a bottle of wine falls, we move from the top point on the graph to the middle point on the graph, to the bottom point on the graph. The only effect of a change in the price of the product is to move from one point on the demand curve to another point on the demand curve. So a "change in quantity demanded" is shown on the graph as a movement from one point on a demand curve to another point on the same demand curve.

* But what if something else changes? For example, how would we graph the change in tastes and preferences (caused by the release of medical studies showing health benefits of red wine)? The price per case of wine does not change, but other factors such as tastes and preferences will cause a change in demand.

* A change in demand- consumers demand different amounts at ever price, causing the demand curve to shift to the right (increase) and to the left (decrease). * The price of the consumer good stayed the same but changes in income, taste/preferences, substitutes, complements, changes in expectations, and the number of consumers in the market will cause the demand curve to shift to the right or to the left.

* So a "change in demand" is shown by a shift in the entire demand curve - it requires us to draw an entirely new demand curve

* 1. Consumer Income- changes in consumer income can cause a change in demand. * When your income goes up, you can afford to buy more goods and services. As incomes rise, consumers are able to buy more products and each and every price. When this happens, the demand curve shifts to the right. * The exact opposite occurs if there was a decrease in income. The loss of income would cause them to buy less of the good and the demand curve then shifts to the left.

* 2. Consumer tastes- Consumers do not always want the same things. Advertising, new reports, fashion trends, the introduction of new products, and even changes in the season can affect consumer tastes. * In style- large demand- demand curve shifts to the right * Out of style- smaller demand-demand curve shifts to the left.

* 3. Substitutes- they can be used in place of other products. * Example: butter and margarine- a rise in the price of butter can cause an increase in the demand for margarine. * The price of the margarine did not change, but the demand went up, therefore, the curve would shift to the right.

* 4. Complements-other related goods are known as complements, because the use of one increases the use of the other. * Example: personal computers and software are two complementary goods. When the price of computers decreases, consumers buy more computers and software. If the price of computers spirals upward, consumers would buy fewer computers and less software.

* 5. Changes in Expectations- refer to the way people think about the future. * Example: A leading maker of audio products announces a technological breakthrough that would allow more music to be recorded on a smaller disk at a lower cost than before. Even if the new product might not be available for another year, some consumers might decide to buy fewer musical CDs today simply because they want to wait for a better product. * Purchasing less would cause the demand to decline and the demand curve would shift to the left.

* 6. Number of consumers- An increase in the number of consumers can cause the market demand curve to shift.

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