1.2.1
Demand
¥ Demand is the amount society is willing and able
to buy at a set price at a given point in time
¥ A normal good is one where, if price rises,
demand will fall and vice versa i.e. there is a
negative correlation
¤ The two variables price and demand move in
the opposite direction to each other
¥ The relationship between price and quantity
demanded can be shown using a demand curve
¥ A demand curve is a graphical representation of
the relationship between price and quantity
demanded
¥ The demand curve shows the quantity demanded
for a good, at any given price, over a period of time
¤ As price falls quantity demanded rises
¤ As price rises quantity demanded falls
Rules for drawing a demand curve:
i) label the y axis price and the x axis quantity
ii) draw the demand curve downward sloping from
left to right and label it demand (or D)
iii) to find the quantity demanded at any given price:
a) select a price (P), shown on the y axis
b) draw a dotted line towards the demand curve
c) draw a dotted line down towards the x axis
to show quantity (Q)
¥ If a change in demand is caused by a change in
price this is shown by a movement along the
demand curve
¥ If the change in demand is caused by a change in
any other factor this is caused by a shift in the
demand curve
¥ Factors leading to a change in demand include:
Demand
¥ Demand is the amount society is willing and able
to buy at a set price at a given point in time
¥ A normal good is one where, if price rises,
demand will fall and vice versa i.e. there is a
negative correlation
¤ The two variables price and demand move in
the opposite direction to each other
¥ The relationship between price and quantity
demanded can be shown using a demand curve
¥ A demand curve is a graphical representation of
the relationship between price and quantity
demanded
¥ The demand curve shows the quantity demanded
for a good, at any given price, over a period of time
¤ As price falls quantity demanded rises
¤ As price rises quantity demanded falls
Rules for drawing a demand curve:
i) label the y axis price and the x axis quantity
ii) draw the demand curve downward sloping from
left to right and label it demand (or D)
iii) to find the quantity demanded at any given price:
a) select a price (P), shown on the y axis
b) draw a dotted line towards the demand curve
c) draw a dotted line down towards the x axis
to show quantity (Q)
¥ If a change in demand is caused by a change in
price this is shown by a movement along the
demand curve
¥ If the change in demand is caused by a change in
any other factor this is caused by a shift in the
demand curve
¥ Factors leading to a change in demand include:
