Ch. 4 Demand
Understanding Demand Buyers and Sellers What effect does their interaction have? Agreement on the price and quantity traded The Law of Demand When a good’s price is lower, consumers will buy more of it. How is “demand” different from want or need? a consumer who demands is wiling and able to buy the good or service at a specified price How is consumption measured? By the amount of a good that is bought The substitution effect When consumers react to an increase in a good’s price by consuming less of that good and more of other goods. The income effect The change in consumption resulting from a change in real income Market demand schedule A table that lists the quantity of a good all consumers in a market will buy at each different price See Figure 4.3 on pg. 81 Why do economists create market demand schedules? To predict how people will change their buying habits when prices change Demand Curve A graphic representation of a demand schedule