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Transcript Chapter_4_Section_2

Chapter 4 Section 2
How are price and
demand related?
Factors Affecting Demand
Change in Quantity Demanded
Movement along the demand curve that shows a
change in the quantity of a product purchased
in response to a change in price
 Figure 4.3 on pg. 96
Income Effect
Change in quantity demanded because of a
change in price that alters consumers’ real
Substitution Effect
Change in the quantity demanded because of
the change in the relative price of the product
Change in Demand
Demand curve shifts itself to become a new
 People are now willing to buy different amounts
of the product at the same prices
 Figure 4.4 on pg. 98
 Can change due to changes in income, tastes,
the prices of related goods, or number of
How can changes in income cause changes
in demand?
Income goes up…you can buy more
How can changes in other products cause
changes in demand
Substitutes—products used in place of other
products (margarine for butter)
 Complements—products that increase the use
of other products (computers and software)