Demand
Demand
- Demand = how much buyers are willing and able to buy at each price.
- Law of demand: price up → quantity demanded down (an inverse relationship), ceteris paribus.
- So the demand curve slopes downward.
Practice
The law of demand says that when price rises, quantity demanded:
Price and quantity demanded move in opposite directions (inverse), so the curve slopes down.
Movements vs shifts
- A change in the good's own price = a movement along the curve.
- A change in any other condition = a shift of the whole curve:
- income, tastes, the price of a substitute (up → this demand up), the price of a complement (up → this demand down), population, advertising.
Practice
Which causes a SHIFT of the demand curve?
Own-price change = movement along; income, tastes, related prices and population shift the curve.
Practice
If the price of coffee rises, the demand for tea (a substitute) will:
A dearer substitute makes buyers switch, so demand for the other good rises.
You've got it
Key idea
- demand = willing and able to buy; the law of demand → downward curve
- own price = movement along; income/tastes/related prices/population = shift
- substitute price up → demand up; complement price up → demand down