ECN 222 1st Edition Lecture 5Outline of Last Lecture - Review Principles 5,6, and 7- Principles 8, 9, and 10Outline of Current Lecture- The Demand Curve- Law of Demand- Non-Price Determinants- Demand vs. Quantity DemandedCurrent LectureThe Demand Curve- The quantity demanded is the amount of a good that buyers are willing and able to purchase- Law of demand: the claim that the quantity demanded of a good falls when the price of the good rises, other things equal- Demand curve: a graph of the relationship between the price of a good and the quantity demandedLaw of Demand- Claim that an increase in price will cause the quantity demanded to decrease.- A change in price causes a movement along the demand curve- Other things (Non-rice Determinants) affect my demand- Example: D(snickers) = F(money, substitutes, etc…)Non-Price DeterminantsThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.-# of Buyerso Market demand is the sum of individual demando More buyers means greater demando Curve shifts righto Plagues and wars reduce population and shifts demand left-Incomeo Normally an increase in income increases demand, D curve shifts right Steak dinners, Cokes, luxuries For a normal good, demand is positively related to incomeo Some goods that you do not want to buy again Example: Ramon, Spam Demand for an inferior good is negatively related to income-Price of Related Goodso Substitutes: two goods for which an increase in the price of one leads to an increase in the demand for the othero Complements: two goods for which an increase in the price of one leads to a decrease in the demand for the other-Tastes and Preferenceso Be careful here o An even that changes tastes or preferences in favor of a good or service shifts demand out-Expectationso Buy now or latero If we expect it to rain tomorrow, demand for umbrellas increases todayDemand vs. Quantity Demanded- Change in demand: a shift in the demand curve occurs when a non-price determinant of demand changes (like income or # of buyers)- At every price, buyers are willing to buy more (or less) than before the shift- When talking about demand in market- Change in the quantity demanded: a movement along a fixed demand curve, occurs when price changes- Nothing about our underlying preferences or desires has changed, only