3.1 Demand LO 1, 2
The amount of a product that consumers want to purchase is called
quantity demanded. It is a flow expressed as so much per period of
time. It is determined by tastes, income, the product’s own price, the
prices of other products, population, and the weather.
The relationship between quantity demanded and price is
represented graphically by a demand curve that shows how much will
be demanded at each market price. Quantity demanded is assumed to
increase as the price of the product falls, other things held constant.
Thus, demand curves are negatively sloped.
A shift in a demand curve represents a change in the quantity
demanded at each price and is referred to as a change in demand.
An increase in demand means the demand curve shifts to the right; a
decrease in demand means the demand curve shifts to the left.
It is important to make the distinction between a movement along a
demand curve (caused by a change in the product’s price) and a shift
of a demand curve (caused by a change in any of the other
determinants of demand).