| Chapter 3 Appendix Outline |
| II. THE LAW OF DEMAND |
| A. The Law of Demand and Consumer Behavior |
| 1. The market demand schedule is the sum of the individual demand schedules
of all consumers in the market. |
| 2. The market demand curve is a graph of the market demand schedule. |
| a. This curve shows the various quantities that individuals plan to purchase
at different prices, holding all other factors that affect demand constant. |
| b. A single point on this curve refers to quantity demanded. |
| | 1. Quantity demanded refers to the quantity that consumers plan to buyat a particular price. |
| c. The negative slope of the demand curve reflects the law of demand. |
| | 1. The law of demand states that more will be bought at lower prices. |
| | 2. The basis for this law is that as individuals consume additional units of a good, its marginal benefit will fall. |
| | a. Because additional units are worth less, the only way to induce consumers to purchase them is to lower the price. |