Demand and Its Influencing Factors

Front

The Law of Demand

Back

The law of demand describes the inverse relationship between the price of a good or service and the quantity demanded.

Front

Substitution Effect

Back

When the price of a good rises, consumers may switch to cheaper alternatives.

Front

Income Effect

Back

When the price of a good rises, consumers' purchasing power decreases, meaning they can afford less of that good.

Front

Change in Demand

Back

Refers to a shift of the entire demand curve, caused by factors other than the price of the good itself.

Front

Consumer Income: Normal Goods

Back

As income increases, demand for normal goods increases (shift to the right).

Front

Consumer Income: Inferior Goods

Back

As income increases, demand for inferior goods decreases (shift to the left).

Front

Substitute Goods

Back

If the price of a substitute good increases, demand for the original good increases (shift to the right).

Front

Complementary Goods

Back

If the price of a complementary good increases, demand for the original good decreases (shift to the left).

Front

Consumer Expectations

Back

Expectations about future prices, income, or availability can influence current demand.

Front

Law of Demand

Back

Describes the inverse relationship between price and quantity demanded.