Managerial Economics and Strategy, 2/e

Summary

1. Demand. The quantity of a good or service demanded by consumers depends on the price of a good, the price of goods that are substitutes and complements, consumers’ incomes, the information they have about the good, their tastes, government regulations, and other factors. The Law of Demand—which is based on observation—says that demand curves slope downward: the higher the price, the less quantity of the good demanded, holding constant other factors that affect demand. A change in price causes a movement along the demand curve. A change in income, tastes, or another factor that affects demand other than price causes a shift of the demand curve. To get a total demand curve, we horizontally sum the demand curves of individuals or other ...