Change in Quantity Demanded and Change in Demand

Market Demand Function

When property rights are nonattenuated (exclusive, enforceable and transferable) the individual's demand functions can be summed horizontally to obtain the market demand function.

For the market the demand function can be represented by adding the number of buyers (NB, or population), Q_X = f (P_X, P_{related goods}, income (M), preferences,... NB) Where NB represents the number of buyers. Using ceteris paribus the market demand may be stated Q_X = f(P_X), given incomes, price of related goods, preferences, NB etc.

When demand is stated Q = f(P) ceteris paribus, a change in the price of the good causes a " change in quantity demanded " The buyers respond to a higher (lower) price by purchasing a smaller (larger) quantity. Only in unusual circumstances (a highly inferior good, a Giffen good) may a demand function have a positive relationship.

A change in quantity demanded is a movement along a demand function caused by a change in price while other variables (incomes, prices of related goods, preferences, number of buyers, etc) are held constant.

A change in demand is a "shift" or movement of the demand function. A shift of the demand function can be caused by a change in: incomes, the prices of related goods, preferences, the number of buyers etc.

Дата добавления: 2014-01-11