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3 3demand
3 3demand
Laugher Curve
Q. What do you get when you cross the Godfather with an economist? A. An offer you can't understand.
Demand
Demand means the willingness and capacity to pay. Prices are the tools by which the market coordinates individual desires.
A Demand Curve
A B C D E
9 8 6 4 2
PA
D 0 QA
Quantity demanded (per unit of time)
$2
$1
Shift in Demand
Change in demand (a shift of the curve)
$2
$1
A D0 D1
Determinants of Demand
Income
An increase in income will increase demand for normal goods. An increase in income will decrease demand for inferior goods.
Tastes
A change in taste will change demand with no change in price.
Expectations
If you expect your income to rise, you may consume more now. If you expect prices to fall in the future, you may put off purchases today.
$4.00
Price per cassette (in dollars)
G F E D C B A
Cathy Bruce Alice Market demand
9 8 7 6 5 4 3 2
6 5 4 3 2 1 0 0
1 1 0 0 0 0 0 0
16 14 11 9 7 5 3 2
2 4
6 8 10 12 14 16
McGraw-Hill/Irwin
Demand
Tastes And Preferences Demographics Expectations