Hi tom123!!
Here I am, still working!!
Demand is the relationship that exists between the price of a good or
service and the quantity of that good or service that a consumer (or a
group of consumers) is able and willing to buy; it is the relationship
between different prices and the amounts people desire to buy at each
price.
Demand is an inverse (falling) function of the price; this is the
called Law of Demand, and it can be stated as follows:
"Ceteris Paribus (other things remaining equal), the quantity of a
good demanded will rise with every fall in its price and the quantity
of a good demanded will fall with every rise in its price."
This means that the demand of a good or service functionally depends
on its price. However, the demand is also causally related to other
factors such as income of costumers, prices of substitutes, the tastes
of the consumer, etc.
On a given demand curve as we move downwards along the demand curve
the quantity demanded goes on rising with every successive fall in
price. On the contrary, moving upwards we can observe a fall in the
quantity demanded with every successive rise in the price. This means
that a change in the price of the product (other things remaining
equal) causes a movement along the demand curve.
There are also other factors which alter the quantity demanded. This
can be expressed by a shift in the demand curve.
The demand curve may shift and quantity demanded may increase or
decrease, due to changes in a number of factors (apart from price),
say the income of a consumer (when he becomes richer or poorer). A
similar effect can be observed with a rise or fall in the price of
substitute and/or complement goods. For instance, tea and coffee or
soaps of different brands are substitutes of each other. Therefore a
rise in price of pasta may result in a reduction in the consumption of
pasta and simultaneously an increase in the consumption of bread to
that extent and vice versa. Or the demand curve may shift and quantity
demanded may increase at the old price if there is a sudden increase
in the number of members in a family, (say because of the unexpected
arrival of guests). Finally, a shift in the demand curve may also be
the result of the change in the tastes of a consumer. A cigarette or
liquor consumer may become addicted because of which his demand for
such goods will rise remarkably even at the old price.
There is an important difference between the change in the quantity
demanded of a particular commodity and change in the demand for that
commodity. While the former is influenced by the single factor: price,
the latter is influenced by various other factors apart from price. A
change in the quantity demanded is represented by a movement along the
demand curve, while a change in the demand is represented by a shift
of the curve (towards the left in case of a decrease and towards the
right in case of an increase).
At the department of Agricultural and Applied Economics at Virginia
Tech I found some pages which will show you how the shifts on the
demand curve; please visit this pages to see the graphs:
"If an increase in consumer income stimulates additional purchases of
widgets, the demand curve shifts upward and to the right. If this
occurs, widgets are called normal goods". An increase in consumer
income, however, may cause a decrease in demand for some goods
(represented as a downward shift in the demand curve). These types of
goods are called inferior goods."
From "Page 2 of Shifts in the Demand Curve" - Agricultural and Applied
Economics at Virginia Tech:
http://classnotes.aaec.vt.edu/aaec1005/coursematerials/DemandExamples/demandshifts2.htm
"A change in consumers’ tastes and preferences for widgets will cause
a change in the demand for widgets. A decrease in consumer preferences
for widgets will shift the demand curve for widgets downward and to
the left."
From "Page 3 of Shifts in the Demand Curve" - Agricultural and Applied
Economics at Virginia Tech:
http://classnotes.aaec.vt.edu/aaec1005/coursematerials/DemandExamples/demandshifts3.htm
"Suppose consumers tend to buy sprockets when they buy widgets
(sprockets and widgets are related goods). A change in the price of
sprockets will shift the demand curve for widgets. If the price of
sprockets decreased and consumers bought more sprockets and widgets,
widgets and sprockets are called complements. Due to the price
decrease in sprockets, the widget demand curve now shifts upward and
to the right (shown on graph below).
If sprockets and widgets were substitutes, a decrease in the price of
sprockets would decrease the demand for widgets."
From "Page 4 of Shifts in the Demand Curve" - Agricultural and Applied
Economics at Virginia Tech:
http://classnotes.aaec.vt.edu/aaec1005/coursematerials/DemandExamples/demandshifts4.htm
"A change in consumer expectations can also shift the demand curve for
widgets. Suppose a potential labor strike against the major widget
manufacturers raises concerns among consumers about the future price
and availability of widgets. Consumers might rush out to buy more
widgets while they can, increasing the current demand for widgets
(represented by a shift in the demand curve upward and to the right).
Nothing else has changed except consumer’s expectations of the
future."
From "Page 5 of Shifts in the Demand Curve" - Agricultural and Applied
Economics at Virginia Tech:
http://classnotes.aaec.vt.edu/aaec1005/coursematerials/DemandExamples/demandshifts5.htm
Sources: You can improve this answer by consulting the following
sources.
ECONOMICS by Paul A. Samuelson, Ed. McGraw Hill, chapter 3 "Basic
Elements of Supply and Demand ".
To see the curves and graphics related to this topics please visit:
http://www.mhhe.com/economics/samuelson17/students/Ch3.mhtml
OUTLINE OF MICROECONOMIC THEORY by Dominick Salvatore, chapter 2
"Demand, Supply and Equilibrium: An Overview".
I hope this helps you in this topic. If you think that this answer is
incomplete, need a clarification or have troubles with links, please
post a Request for an answer clarificatioon and I will respond to you.
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livioflores-ga |
