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• Demand


  The consumer's desire to purchase goods or services
• Supply


  The market's ability to produce a good or service
• Demand curve


  A schedule of willingness and capacity of a consumer to buy a commodity at alternative prices at a given point in time other things held constant

  
• Factors affecting the demand of a commodity

  • Income
  • Prices of other commodities
  • Expectation
  • Taste
  • Market
• Income


  The capacity to purchase is influenced by the income of the consumer
• Prices of other commodities


  Aside from the price of the commodity being sold, the demand for a good or service may be influenced by the prices of other goods and services
• Expectation


  The prospect on what is going to happen to the price can influence the demand for the commodity
• Taste


  Shaped by cultural values, peer pressure, and power of advertising
• Market


  The size and characteristic of the market can also influence the demand for a commodity
• The demand curve is downward sloping due to the substitution and income effect, and the principle of diminishing marginal utility

  
• Substitution effect


  Describes the decisions of a consumer to substitute an expensive goods with cheaper goods when there is price change
• Income effect


  Refers to the modification of the consumption of a commodity due to the change in the purchasing power of the consumer resulting from a price change
• Principle of diminishing marginal utility


  Consumers can have a feeling of satisfaction when they continuously increase the consumption of a particular commodity
• Changes in demand curve

  • Movement along demand curve
  • Shifts in demand curve

  
• Movement along the demand curve


  Change in quantity demand resulting from the change in the price of the commodity

  
• Shifts in demand curve


  Changes in demand curve caused by any of the other factors beside the price of commodity

  
• A positive effect will shift the demand curve to the right, and a negative effect will shift the demand curve to the left

  
• Reasons for a shift in demand curve to the right: the good became more popular, the price of a substitute good increased, the price of a complement good decreased, a rise in incomes, or seasonal factors