DEMAND COMPLETE NOTES IN SUPPLY DEMAND TOPIC
DEMAND
THE LAW OF DEMAND
In general, the law of demand states that the quantity demanded and the
price of a good or service is inversely related, other things remaining
constant Learning objective
Explain the concept of demand and discuss the factors that affect i
KEY POINTS
• The demand curve is downward sloping, indicating the negative
relationship between the price of a product and the quantity
demanded.
• For normal goods, a change in price will be reflected as a move along
the demand curve while a non-price change will result in a shift of the
demand curve.
• Two exceptions to the law of demand are Giffen goods and Veblen
goods.
KEY TERMS
, GIFFEN GOOD
A good which people consume more of as only the price rises; having a
positive price elasticity of demand.
VEBLEN GOOD
A good for which people's preference for buying them increases as a direct
function of their price, as greater price confers greater status.
NORMAL GOOD
A good for which demand increases when income increases and falls when
income decreases but price remains constant.
In economics, the law of demand states that the quantity demanded and the
price of a good or service is inversely related, other things remaining
constant. Therefore, the demand curve will generally be downward sloping,
indicating the negative relationship between the price of a good or service
and the quantity demanded.
MOVEMENT ALONG THE DEMAND CURVE
If the income of the consumer, prices of the related goods, and preferences of
the consumer remain unchanged, then the change in quantity of good
demanded by the consumer will be negatively correlated to the change in the
price of the good or service. The change in price will be reflected as a move
along the demand curve.
2
DEMAND
THE LAW OF DEMAND
In general, the law of demand states that the quantity demanded and the
price of a good or service is inversely related, other things remaining
constant Learning objective
Explain the concept of demand and discuss the factors that affect i
KEY POINTS
• The demand curve is downward sloping, indicating the negative
relationship between the price of a product and the quantity
demanded.
• For normal goods, a change in price will be reflected as a move along
the demand curve while a non-price change will result in a shift of the
demand curve.
• Two exceptions to the law of demand are Giffen goods and Veblen
goods.
KEY TERMS
, GIFFEN GOOD
A good which people consume more of as only the price rises; having a
positive price elasticity of demand.
VEBLEN GOOD
A good for which people's preference for buying them increases as a direct
function of their price, as greater price confers greater status.
NORMAL GOOD
A good for which demand increases when income increases and falls when
income decreases but price remains constant.
In economics, the law of demand states that the quantity demanded and the
price of a good or service is inversely related, other things remaining
constant. Therefore, the demand curve will generally be downward sloping,
indicating the negative relationship between the price of a good or service
and the quantity demanded.
MOVEMENT ALONG THE DEMAND CURVE
If the income of the consumer, prices of the related goods, and preferences of
the consumer remain unchanged, then the change in quantity of good
demanded by the consumer will be negatively correlated to the change in the
price of the good or service. The change in price will be reflected as a move
along the demand curve.
2
