Holt Economics 12/31/2018 CHAPTER 3 Demand Chapter 3

Demand We all have powers as consumers. We have an effect on the prices of certain products. Demand is the amount of goods or services consumers are willing to buy at a certain price.

Difference between demand and the quantity demanded. SECTION 1 Nature of Demand Difference between demand and the quantity demanded. demand—consumer demand at various prices quantity demanded—consumer demand at each particular price

Law of demand: Nature of Demand SECTION 1 There is an inverse relationship between a product’s price and the quantity demanded.

What demand schedules and demand curves illustrate: SECTION 1 Nature of Demand What demand schedules and demand curves illustrate: Demand schedules show in table format the quantity of products consumers are willing to buy at a series of possible prices the quantity of products consumers are able to buy at a series of possible prices Demand curves show in graph format the data listed in demand schedules the rate of change for demand at each price

SECTION 2 Changes in Demand When a product’s demand shifts, different quantities of a product are demanded at each and every price.

Determinants of product demand shifts: SECTION 2 Changes in Demand Determinants of product demand shifts: consumer tastes and preferences market size income prices of related goods consumer expectations

Difference between substitute goods and complementary goods: SECTION 2 Changes in Demand Difference between substitute goods and complementary goods: substitute goods—used to replace the purchase of similar goods when prices increase complementary goods—commonly used with other goods

SECTION 3 Elasticity of Demand Demand elasticity reflects the extent to which changes in a product’s price affect the quantity demanded by consumers.

Difference between elastic and inelastic demand: SECTION 3 Elasticity of Demand Difference between elastic and inelastic demand: elastic demand—when a small change in a product’s price results in a significant change in the quantity demanded inelastic demand—when a change in a product’s price has only a slight effect on the quantity demanded

Inelastic demand a products price is not effected by demand. This happens because you have a product that is a necessity. Demand stays the same regardless of price change.

Demand elasticity is measured by using the total-revenue test. SECTION 3 Elasticity of Demand Demand elasticity is measured by using the total-revenue test.