Economics ProjectEconomics Project

1. Change in demand and

quantity demanded

2. Goods

…….Meaning of change in quantity demanded…..

Quantity demanded means the amount of goods that a person is willing and able to buy at a particular price.

Change in quantity demanded is caused by a change in a good’s price, holding all other factors constant. It is represented by a movement along the same demand curve.

~*~*Example of a change in quantity demanded~*~*

Assume a department store holds a summer sale; the price of goods such as clothes may drop. The consumers will want to buy a larger quantity at a lower price according to law of demand. The quantity demanded for clothes will increase. It is represented by a movement along the same demand curve. It is caused by a change in its own price and not caused by a change in other factors. So it is a case of change in quantity demanded.

Meaning of change in Meaning of change in demanddemand

Demand refers to the quantity demanded at all given prices.

Change in demand means that the quantity demanded change at every price. It is caused by a change in factors (e.g. weather, income, etc.) other than a good’s own price. It is represented by a shift of the entire demand curve.

Example of a change in demand When the income of the people increases, demand for most of the

goods such as clothes increase. These goods are called normal goods or superior goods. The demand curve for clothes will shift to the right. However, when the income of the people increases, demand for some goods such as rice decrease. These goods are called abnormal goods or inferior goods. The demand curve for rice will shift to the left. It is caused by a change in income, not by a change in the goods’ own prices. So it is a case of change in demand.

Goods

In Economics, goods refer to anything that can satisfy human wants. Goods can be classified by two methods.

The first method is depending on how they are used; goods can be classified into capital goods and consumer goods.

Capital goods & Consumer goods

Capital goods are the goods produced for assisting the production of other goods. Facsimile machines in office and tables in restaurant are the examples of capital goods.

Consumer goods are the goods produced for direct consumption. Tissue, telephone and television are the examples of consumer goods.

Facsimile machine

TelevisionTelephone Tissue

Economic Goods and Free Goods

An economic good is any good that is insufficient to satisfy all our wants, i.e. it is scarce. As people prefer to have more of it, they are willing to pay for it, or give up something to get it. The opportunity cost in production is positive. Furniture, food and drinks are the examples of economic goods.

The second method is according to their quantities relative to our wants, goods can be classified into economic goods and free goods.

Drinks

Ω A free good is any good whose quantity is sufficient to satisfy all our wants, i.e. it is not scarce. As people do not prefer to have more of it, they will not pay for it. They need not to give up something to get it. The opportunity cost in production is zero. Air and seawater are the examples of free goods.

Seawater

Ω In Hong Kong, some people will give you some goods that free of charge. For example: tissue. Although they are free of charge, they are not free goods, because people will prefer to have more of them and they are willing and able to pay for them. Moreover, it is costly to produce them. So they are economic goods. In conclusion, those goods that are free of charge may not be free goods.

The EndThe End

Liz Chan Joyce Fung Nancy Ng Tracy Ng