Foundation for the law of demand:
1. Common sense and simple observation наблюдение are consistent with the law of demand. People ordinarily обычно do buy more of a product at a low price than at a high price.
2. In any specific time period each buyer of a product will derive извлекать less satisfaction (or benefit or utility) from each additional unit of the good consumed.
Consumption is subject to diminishing marginal utility.
3. The law of demand can also be explained in terms of income and substitution effects.
The income effect indicates указывает that a lower price increases the purchasing power of a buyer’s money income enabling давать возможность the buyer to purchase more of the product than she or he could buy before. A higher price has the opposite effect.
Normal good: a good whose demand curve shifts измерение rightward when the incomes of buyers increase.
Inferior низший good: a good whose demand curve shifts leftward влево when the incomes of buyers increase.
The substitution замена effect suggests предлагать that at a lower price, buyers have the incentive побуждение to substitute the now cheaper good for similar goods which are now relatively more expensive. Consumers tend to substitute cheap products for dear products.
A change in quantity demanded designates обознчает the movement from one point to another point – from one price – quantity combination to another – on a fixed demand schedule or demand curve.
The amount of an item buyers actually purchase in a market over a given period is depends on a number of important determinants:
1. Its price.
2. Buyers' available income:
commodities товар whose demand varies directly with money income are called superior начальник, or normal, goods;
goods whose demand varies inversely with money income are called inferior внутренний goods.
3. Buyers' wealth богатство (the value of assets ценность such as stocks запас, bonds гарантии, homes and other real estate, and business property).
4. Expectations of future price changes.
5. The prices of related items:
when two products are substitutes заменяются, the price of one and the demand for the other move in the same direction;
when two products are complements дополнение, the price of one and the demand for the other move in the opposite direction.
Substitutes замена: two goods are substitutes in consumption if an increase in the price of one causes a rightward shift in the demand curve for the other.
Complements дополнительные are goods which are used together and usually demanded together. Two goods are complements in consumption if an increase in the price of one causes a leftward shift in the demand curve for the other.
Unrelated несвязанные goods: independent goods.
6. Tastes or current распространенный fashions.
7. The population served подача by the market.
In analyzing the behavior of buyers in markets, we concentrate on the effect of each of these determinants one at a time. We pay special attention to the relationship between the price of an item and the quantities buyers will purchase покупная цена.
An increase in demand – the decision by consumers to buy larger quantities of a product at each possible price – can be caused by:
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A favorable change in consumer tastes.
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An increase in the number of buyers.
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Rising incomes if the product is a normal good.
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Falling incomes if the product is an inferior глубинный good.
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An increase увеличивать in the price of a substitute заменимый good.
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A decrease in the price of a complementary дополнительные good.
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Consumer expectations of higher future prices and incomes.
Change in demand is shift сдвиг of a demand curve (fig. 3.2).
