Demand

• what is demand?

  The quantity of a good or service that consumers are willing and able to buy at a given price.
• what is a demand curve?


  a graph that shows the relationship between the price of the products and the demand
• what is the equation for total revenue?


  price x quantity
• what does the y axis show on a demand curve?


  the price
• what does the x axis show on a demand curve?


  the quantity
• what relationship does a demand curve have?

  an inverse
• what is this?

  a demand curve

  
• what do demand curves help a business predict?

  • change in demand in response to change in price (plan stock levels, staffing, etc.)
  • resulting change in revenue (is price change a good idea?)
• what does a change in the price of a product cause?


  a movement along the demand curve
• what are substitutes?


  goods that provide similar benefits that consumers could use as an alternative
• what are complementary goods?


  goods that are consumed together
• what are normal goods?


  Goods for which demand increases as income increases.
• what are inferior goods?


  Goods for which demand decreases as income increases.
• what factors can affect demand?

  • price
  • changes in related goods (rival and substitute goods)
  • changes in consumer incomes
  • tastes and preferences
  • advertising and branding
  • demographics
  • external shocks
  • seasonality
• if the demand lowers what way does the line move?


  left
• if the demand rises what way does the line move?


  right