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chapter three

MARKET DEMAND FOR CORN, THREE BUYERS

DETERMInants of demand Factors other than its price that determine the quantities demanded of a good or service.

Of course, there are usually many more than three buyers of a product. To avoid hundreds or thousands or millions of additions, we suppose that all the buyers in a market are willing and able to buy the same amounts at each of the possible prices. Then we just multiply those amounts by the number of buyers to obtain the market demand. This is the way we arrived at curve D1, in Figure - , for a market with 200 corn buyers whose demand is that shown in Table -1. Table - shows the calculations.

In constructing a demand curve such as D1 in Figure - , we assume that price is the most important influence on the amount of any product purchased, even though other factors can and do affect purchases. These factors, called determinants of demand, are assumed to be constant when a demand curve like D1 is drawn. They are the "other things equal" in the relationship between price and quantity demanded. When any of these determinants changes, the demand curve will shift to the right or left. For this reason, determinants of demand are sometimes referred to as demand shifters.

The basic determinants of demand are (1) consumers' tastes (preferences), (2) the number of consumers in the market, ( ) consumers' incomes, (4) the prices of related goods, and (5) consumer expectations about future prices and incomes.

MARKET DEMAND FOR CORN, THREE BUYERS

Price per bushel

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