📚

All Subjects

 > 

🤑 

AP Macro

 > 

💸

Unit 1

1.4 Demand

2 min readmay 15, 2021

Jeanne Stansak


AP Macroeconomics 🤑

Bookmarked 3k • 86 resources
See Units

Definition of Demand

Demand is defined as the different quantities of goods and services that consumers are willing and able to purchase at various price levels.

Demand vs. Quantity Demanded

Quantity demanded is a the amount of a good or service that is desired at a particular price level.
Below is a demand curve, quantity demanded is one point on the curve (i.e. A, B, or C) and Demand is the entire line with all of the points that make it up.
https://firebasestorage.googleapis.com/v0/b/fiveable-92889.appspot.com/o/images%2F-0Vt2KI4jriBn.png?alt=media&token=6cedaaf1-d344-4026-b20b-ec8272202d18

Law of Demand

The law of demand states that the relationship between the price level and the quantity demanded of a good or service is inverse. As the price level rises, consumers are less willing or less able to purchase the same quantity, and, therefore, buy less. As the price level falls, consumers are more willing or more able to purchase a greater quantity, and, therefore, buy more.
In summary:
  • When price level increases, the quantity of a good demanded decreases.
  • When price level decreases, the quantity of a good demanded increases.
Using the graph above, when the price rises from P1 to P2, the quantity demanded decreases from 9 units to 7 units. Also, when the price drops from P3 to P2, the quantity demanded increases from 3 units to 7 units.
💡The only thing that changes the quantity demanded is the price of the good or service.

Determinants of Demand

Determinants are factors that can cause the entire demand curve to increase or decrease. When there is an increase in demand (see graph below), the demand curve will shift right. At every price level, there is an increase in the quantity demanded. When there is a decrease in demand (see graph below), the demand curve will shift left. At every price level, there is a decrease in quantity demanded.
https://firebasestorage.googleapis.com/v0/b/fiveable-92889.appspot.com/o/images%2F-Md6Dgavbpg21.png?alt=media&token=4f956c89-73b8-4945-8df5-d63340bc3ec9
There are several determinants of demand that cause the shift to the right (increase in demand) or the shift to the left (decrease in demand). We are going to use the acronym I-N-S-E-C-T as a way to remember all of the determinants.

Was this guide helpful?

Join us on Discord
Thousands of students are studying with us for the AP Macroeconomics exam.
join now
Hours Logo
Studying with Hours = the ultimate focus mode
Start a free study session
🔍 Are you ready for college apps?
Take this quiz and find out!
Start Quiz
Browse Study Guides By Unit
📝Exam Skills: MCQ/FRQ
💸Unit 1: Basic Economic Concepts
📈Unit 2: Economic Indicators and the Business Cycle
💲Unit 3: National Income and Price Determination
💰Unit 4: Financial Sector
⚖️Unit 5: Long-Run Consequences of Stabilization Policies
🏗Unit 6: Open Economy-International Trade and Finance
FREE AP macro Survival Pack + Cram Chart PDF
Sign up now for instant access to 2 amazing downloads to help you get a 5
Join us on Discord
Thousands of students are studying with us for the AP Macroeconomics exam.
join now
💪🏽 Are you ready for the AP Macro exam?
Take this quiz for a progress check on what you’ve learned this year and get a personalized study plan to grab that 5!
START QUIZ