DEMAND

the various quantities of a given commodity or service which consumers

would buy in one market in a given period of time,

at various prices, or at various incomes, or at various prices of related goods.

desire or wish to buy and consume a commodity or service backed by

adequate willingness and ability to buy.

LAW OF DEMAND

other things remaining the same, as the price of the product rises (falls), the
quantity demanded of that product falls (rises).

thus, there is an inverse relationship between price and quantity demanded.

DEMAND CURVE

was a downward-sloping line in a graph that allows us to analyze a demand

schedule more clearly

because we can see visually what is occurring.

A demand curve shows the relationship between the quantity demanded of a

good and

its price when all other influences on consumer's planned purchases remain
the same.

DEMAND SCHEDULE

To illustrate the relation between the quantity of a commodity demanded and

its price,

a demand scheduled is drawn upon the assumption that all the other
influences remain unchanged.

It thus attempts to isolate the influence exerted by the price of the good upon
the amount sold

DEMAND EQUATION

A. price elasticity = Ep = %change in quantity demand over(/divide) %change

in price

B. Ep = change in quantity over(/divide) original quantity x(*) 100

C. Ep = change in price over(/divide) original price x(*) 100

 D. Ep = change in quantity over(/divide) original quantity x(*) change in price
over(/divide) original price

INFERIOR GOODS

a good for which demand decreases as income increases.

NORMAL GOODS

is one for which demand increases as income increases.

SUBSTITUTES

a good that can be used in place of another good.

COMPLIMENTARY GOODS

a good that is used in conjunction with another good.

GIFFEN GOODS

goods which exhibit direct price-demand relationship and

are considered inferior by the consumers and which occupy a substantial

place in consumer's budget.

CHANGE IN QUANTITY DEMANDED

refers to change in the quantity purchased due to increase or decrease in the

price of a product.

CHANGE IN DEMAND

refers to increase or decrease in demand of a product due to various

determinants of demand,

while keeping price at constant.

SHIFT OF DEMANDER TO THE RIGHT

increase in demand. On a graph, an increase in demand is shown as a shift of

the entire demand curve to the right.

SHIFT OF DEMANDER TO THE LEFT

decrease in demand. On a graph, a decrease in demand is shown as a shift of

the entire demand curve to the left.

PRICE ELASTICITY OF DEMAND

 the percentage change in the quantity demanded of a given product that

results because of a given percentage change in the price of that product.

ELASTIC

If the number is more than one, we say that demand is relatively elastic.

This means that buyers not only reduce their buying, but they reduce it
considerably, as

the price rises or consumers stop demanding the product as prices increase.

INELASTIC

If the number is more than zero but less than one, we say that

demand is relatively inelastic. This means that buyers reduce their buying,
but very little, as the

price of the product rises or consumers will continue to demand the good,
regardless of the price.

UNIT ELASTIC

If the number exactly equals one, we say that demand is unit elastic. "Unit"
means one.

This means the change in consumer demand for a good is equal to the
change in the price of the good

PERFECTLY ELASTIC

if the number is infinitely large, we say that

the demand is perfectly elastic.

PERFECTLY INELASTIC

If the number exactly equals zero, we say that demand is perfectly inelastic.
This

means that buyers do not change their quantity demanded at all if the price
rises. Perfectly

inelastic demand would be a violation of the law of demand. We shall not

encounter any

examples of perfectly inelastic demand.

INCREASE IN DEMAND

refers to the rise in demand of a product at a given price.

DECREASE IN DEMAND

refers to the fall in demand of a product at a given price.

INCREASE IN QUANTITY DEMANDED

Expansion/increase of demand refers to the period when quantity demanded

is more because of the fall in prices of a product.

DECREASE IN QUANTITY DEMANDED

Contraction/Decrease of demand takes place when the quantity demanded is

less due to rise in the price of the product.