The supply and demand model is a
model of a competitive market—one
in which there are many buyers and
sellers of the same good or service.
• The demand schedule shows how
the quantity demanded changes as
the price changes. A demand curve
illustrates this relationship.
• The law of demand asserts that a
higher price reduces the quantity
demanded. Thus, demand curves
normally slope downward.
• An increase in demand leads to a
rightward shift of the demand curve:
the quantity demanded rises for any
given price. A decrease in demand
leads to a leftward shift: the quantity
demanded falls for any given price. A
change in price results in a change in
the quantity demanded and a movement
along the demand curve.
• The five main factors that can shift
the demand curve are changes in (1)
the price of a related good, such as
a substitute or a complement, (2)
income, (3) tastes, (4) expectations,
and (5) the number of consumers.
• The market demand curve is the horizontal
sum of the individual demand
curves of all consumers in the market.