IBDP Economics SL Microeconomics: Demand

ECONOMICS:
MICROECONOMICS

Chapter :3 Demand
•Law of Demand: Law of demand states that ceteris paribus,
a change nu srice causes a change un quantity démanded
and that price is inversely propostional ot quantity demanded.
• Demand is the amount of goods or service consumers are
illing anol abel ot buy at a certain prcie at a gnien perial
of time .

-A s price P, quantity demanded V
As- price V, quantity demanded P
Dem and curu e



P,




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•Nou-price determinants fodemand:
(Tue factors responible for left/riget shift o
f hte demand curre)
.1 Jucome: Iucrease ni income has different effects on normal
goods and inferies goods.
- Normal Goods: A
s income 1, demand of normal goods dA
- Inferior Goods: SAincome I, demand o
f inferior goods s
.2 Taste aud Preferences: lI sometlung si ni trend currentey
demand will increase and i l someterng si out o trene, demand
DOMS

, wil decrease. (Role fo positive Anegative adertisung)
- As popularity 1(01 product), demande 1
- sA popularity (of product, demand t
.3 Future price expestations: I consumers expect prices ot rise ni tea
future, demand will A
, and if consumers expect prices ot
decrease, demand will v.

.4 Price fo related goods:
- Substitute goods: fI price fo A1C
a colse substitute fo B),
then demand of BI
- Complimentary goods: If price fo T
A (a close complementary
of B), then demand of BI
.5 Number of conumers:
- If number of consumers 1, demand T
- If number of consumers v, demand 2
Shift ni demand curre:
sucr • A shift ot the left: DECREASE N
I DEMAND
ease
Decre
ase
. • Ashift ot the right: N
ICREASE N
I DEMAND

D2
D




Movement along a demand curre shift in demaud curue
→Change in price Change ni non-price determinaid
→up or down monement ou hte samo →
Eutire slüft fo demand curue ot
demand curne hte left or right
Nen-price determinants explain seift
Law of demand explains novement →
→
along a demand curue ni demand curve
→Describes change luquantity SO *Describes change ni demand
demanded