, Markets
markets buyers (demanders) and sellers (suppliers) together
=
place where come
·
markets can be local national international
personal (face-to-face contact between buyer and seller
markets be
can
(buyer online
·
faceless + seller never see each other -
ording
Informal (vendor on S treet
a corner)
Demand
Demand schedule/curve of
showing willing
·
the amounts that
= a various a product consumers are
series of possible prices specific period of
to purchase ,
at a
during a time
·
A demand schedule = Demand in table form showing the amounts of a product a consumer
buys at diff prices
Law of Demand
E
The principle that
,
with other
things equal ,
an increase in a
products product's price
will reduce the quantity of it demanded and conversely for a decrease in price
↳
-
as price falls -
>
quantity demanded increases
other-things -
equal - we assume price = only
demand
factor
influencing
-
as price rises
> quantity demanded falls
- ↳ * exception *
·
Giffen Goods (staple foods)
Why is price & quantity demanded inversly related ?
The demand increases when price increases
The law of demand is common sense
2 Each buyer of a product will derive less satisfaction Because of dimishing marginal utility ,
consumers
consumed will only buy if falls
from each successive unit of the product D more
price .
3 Because of the income + substitution effect
income effect : a lower price increases the
purchasing power of a buyers income (they can buy more than before
substitution effect : a lower
price gives buyers the incentive to substitute what is now a less expensive product for
,
similar products that are now
relatively more expensive
.
markets buyers (demanders) and sellers (suppliers) together
=
place where come
·
markets can be local national international
personal (face-to-face contact between buyer and seller
markets be
can
(buyer online
·
faceless + seller never see each other -
ording
Informal (vendor on S treet
a corner)
Demand
Demand schedule/curve of
showing willing
·
the amounts that
= a various a product consumers are
series of possible prices specific period of
to purchase ,
at a
during a time
·
A demand schedule = Demand in table form showing the amounts of a product a consumer
buys at diff prices
Law of Demand
E
The principle that
,
with other
things equal ,
an increase in a
products product's price
will reduce the quantity of it demanded and conversely for a decrease in price
↳
-
as price falls -
>
quantity demanded increases
other-things -
equal - we assume price = only
demand
factor
influencing
-
as price rises
> quantity demanded falls
- ↳ * exception *
·
Giffen Goods (staple foods)
Why is price & quantity demanded inversly related ?
The demand increases when price increases
The law of demand is common sense
2 Each buyer of a product will derive less satisfaction Because of dimishing marginal utility ,
consumers
consumed will only buy if falls
from each successive unit of the product D more
price .
3 Because of the income + substitution effect
income effect : a lower price increases the
purchasing power of a buyers income (they can buy more than before
substitution effect : a lower
price gives buyers the incentive to substitute what is now a less expensive product for
,
similar products that are now
relatively more expensive
.
