1. The Demand Curve and Elasticity
Chapter 7 Section 2 Notes
The Demand Curve and Elasticity

2. Demand Schedule
Table showing quantities demanded at different possible prices.

3. Demand Curve
Downward-Sloping line that shows in graph form the quantities demanded at each possible price.

4. KEEP IN MIND
A change in quantity demanded (Is NOT the same as ) ≠ a change in demand.

5. Determinants of Demand
Factors that affect demand for a specific product or service.
Change in taste & preferences
∆ Population
∆ Income
∆ Substitute Goods
∆ of a Complementary Goods

6. Cont. Changes in Taste & Preferences Change in Population
Example: Pokemon
Change in Population

7. Cont. Change in Income Normal Goods – Income ↑ Quantity Demanded ↑
Inferior Goods – Income ↑ Quantity Demanded ↓

8. Cont.
Substitute Goods – Goods that can be used in place of another good.
Complementary Goods – Goods that go hand in hand (Generally bought and sold together for joint use).

9. Change in Demand vs. Quantity Change

10. Increase in Population

11. Decrease in Income

12. Substitute Goods

13. Complementary Goods

14. The Price Elasticity of Demand
Elasticity – Economic concept dealing with consumer’s responsiveness to an increase or decrease in the price of a product.

15. Cont.
Elasticity of Demand – How much the demand varies according to changes in price.

16. Elastic Demand
Situation in which a given rise or fall in product’s price greatly affects the amount that people are willing to buy.
These are goods that usually have many substitutes or they are luxury goods.
Example – A specific energy drink or soft drink

17. Inelastic Demand
Situation in which a product’s price change has little impact on the quantity demanded by consumers.
These are goods that are necessities or have no or very few substitutes
Example – A medication you have to have or Gasoline