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Cheatsheet Micro 1 - Demand

The document provides an overview of demand curves. It discusses: 1. The law of demand which states that as price increases, quantity demanded decreases, and vice versa. 2. Factors that affect demand including price of substitutes/complements, income, tastes, number of consumers, and expectations. 3. The demand curve slopes downward because of the substitution and income effects - as price decreases, consumers substitute to buying more of the good.

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Marley Essam
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20 views

Cheatsheet Micro 1 - Demand

The document provides an overview of demand curves. It discusses: 1. The law of demand which states that as price increases, quantity demanded decreases, and vice versa. 2. Factors that affect demand including price of substitutes/complements, income, tastes, number of consumers, and expectations. 3. The demand curve slopes downward because of the substitution and income effects - as price decreases, consumers substitute to buying more of the good.

Uploaded by

Marley Essam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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DEMAND CURVE- Cheat Sheet

All about Demand Explanation Demand curve


Demand Substitute goods having one less the
/web/www.cheatography.com/public/images/cheatography_logo.pdf
the quantity of a good or service that other less desirable.
consumers are willing and able to purchase butter and
at a given price in a particular time period margarine
Law of demand complementary consume jointly
Price goes down, quantity demanded goods (coffee, sugar).
increases.
Income (normal or Y increases,
Price goes up, quantity demanded
inferior goods) consumer
decreases.
purchasing power
(vise versa)
increases and
demand also
Factors that affect demand increases There is a negative relationship between
1. Price of other goods price and quantity demanded.
- substitute goods Differentiate between
- complementary goods if the price increases, the quantity
Change in Change in demand
2. Income demanded decreases
quantity
3. Tastes /Preferences if the price decreases, the quantity
demanded
4. Number of Consumers demanded increases
5. Expectations happen because of: happen because of
the price of the another factor
item itself other than factor
Why is the demand curve downward
the price of the
sloping?
item itself
Subsitution Effect Changes in price
a) Price changes of
of goods motivate consumers
other goods
to buy cheaper
substitute products b) Income

Income Effect When price goes c) Tastes and


down, people buy Preferences
more of a product d) Number of
because their Consumers
purchasing power
e) Future
has increased; vice
Expectation
versa.
Law of Diminishing As you continue to
Marginal Utility consume a given
product, you will
have less satisfaction
the more you have.

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Updated 03 December, 2023.
Page 1 of 1.

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