Economics 9. Chapter Demand and Supply. Business & Marketing.

Demand
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Demand
1 Demand Analysis
* The law of demand is of the view that the quantity of services and goods that a purchase is able and willing to buy varies inversely with the good or service’s price (Rafieisakhaei et al., 2016). This fundamental economic concept implies that when the price of the commodity or service increases, its quantity demanded will decrease. In contrast, a fall in its price leads to an increase in the quantity demanded.
* The concept is explained using the demand curve. From the graph below, a higher price (P1) corresponds to a lower quantity (Q1), while a lower price (P2) corresponds to a higher quantity (Q2). Therefore, this graph presents a decrease of quantity demanded from Q2 to Q1, whereas the price increases from P2 to P1.
* The concept of decrease in demand is expressed through a shift of the demand curve. From the graph below, both price and quantity will decrease from P1 to P2 and Q1 to Q2, respectively. Overall, the demand shifts to the left.
* When the complement’s price decreases, the demand shifts to the right (increases) since consumers will afford more of the commodity.
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* Diana’s demand...