Macroeconomics
Tastes and Preferences Change
Favorable →Shift: Right (overall demand increases). Unfavorable →Shift: Left (overall demand decreases).
↑ Income →Shift: Right (overall demand increasesdue to higher purchasing power). ↓ Income →Shift: Left (overall demand decreases dueto lower purchasing power). ↑ Market and Population Size →Shift: Right (overalldemand increases due to the increase in the number of consumers). ↓ Market and Population Size →Shift: Left (overalldemand decreases due to the decrease in the number of consumers). Expectation of ↑ Future Price →Shift: Right (demandincreases based on anticipation: buy now, hold later). Expectation of ↓ Future Price →Shift: Left (demanddecreases based on anticipation: hold now, buy later). ↑Substitute Price →Shift: Right (demand increasesas cheaper price attracts consumers). ↓Substitute Price →Shift: Left (demand decreasesas higher price discourages consumers). ↑ Complement Price →Shift: Left (demand decreasesdue to costlier complementary goods). ↓ Complement Price →Shift: Right (demand increasesdue to cheaper complementary goods).
Income Change
Market Size and Population Change
Expectations
Substitute Price
Complement Price
Individual Demand, Market Demand, and Aggregate Demand An individualdemand curverepresentstherelationshipbetweenthepriceandquantitydemandedbya single consumer. This demand curve is derived from an individual demand schedule. When all consumers’ demands in a market are added together, we get the market demand curve (e.g., the demand in the market for apples). This curve is the horizontal summation of all individual demand curves where quantity is plotted on the x-axis and price on the y-axis. The totalamountofgoodsandservicesconsumedbyallthesectorsandmarkets inaneconomyis referredtoasthe aggregatedemand whichisamacroeconomictopicthatwillbediscussedlaterinthis book. Aggregate demand affects market demand which is a microeconomics topic. Supply Supply refers to the quantity of goods and servicesthat sellers are willing and capable of offeringfor sale in a market at various price levels.
31
© 2024 ACHIEVE ULTIMATE CREDIT-BY-EXAM GUIDE|MACROECONOMICS
Made with FlippingBook - Online Brochure Maker