Summary
Summary law of demand microecon notes
- Course
- Institution
microecon notes - law of demand summarised
[Show more]
Seller
Follow
dhaanimehta
Content preview
Chapter 2 - Law of Demand- Preferences - your wants and their intensities
- Weighing benefits, costs and substitutes - Your willingness to buy a product or
service depends on your ability to pay, comparative benefits and costs, and the
availability of substitutes.
- Demand - consumers’ willingness and ability to pay for a particular product or service
- For any choice, what you are willing to pay or give up depends on
- Cost
- Availability of substitutes
- Smart choices are marginal choices
- Marginal benefit :
- Additional benefit from a choice
- Changing with circumstances
- Explains the diamond / water paradox (diamond = larger marginal
benefit)
- Willingness to pay depends on marginal benefit, not total benefit
- Water is abundant, marginal benefit is low
- Diamonds are scarce, marginal benefit is high
- Law of Demand -
- Quantity demanded - the amount you actually plan to buy at a given price
- Market demand - the sum of demands of all individuals willing and able to
buy a particular product or service
- Law of demand - if the price of a product or service rises, quantity demanded
decreases, other things remaining the same
- Demand curve - shows relationship between price and quantity demanded,
other things remaining the same = downward sloping
- It is the same as the marginal curve
- Quantity demanded changes only with a change in price.
- All other influences on consumer choice change demand.
- Changes in Demand = shifts in the demand curve - right and left
- Increase in demand
increase in consumers’ willingness and ability to pay. Rightward shift of
demand curve.
- Decrease in demand
decrease in consumers’ willingness and ability to pay. Leftward shift of
demand curve.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller dhaanimehta. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $7.29. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79976 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now