Cambridge International as and a level Economics Ebook

‘standard’ PC (US$)
Quantity demanded 
per week – demand curve 
D
1
2,000
0
1,800
1,000
1,600
2,000
1,400
3,000
1,200
4,000
1,000
5,000
800
6,000
Table 2.10
Price of a 
‘standard’ PC (US$)
Quantity demanded per 
week – demand curve 
D
2
2,000
2,000
1,800
3,000
1,600
4,000
1,400
5,000
1,200
6,000
1,000
7,000
800
8,000
Table 2.9 
Shift s in the market demand curve
1800
1600
3000
4000
Quantity demanded
D
2
D
0
0
Price (US$)
Figure 2.14 
A shift to the right in the market demand 
curve for PCs
57
Chapter 2: The price system and the microeconomy 

---

Income/the ability to pay
What infl uences someone’s ability to pay for a product? 
Th
e key things are:
■ 
an individual’s income or, more specifically, the purchasing 
power of their income aft er taxation
■ 
the availability of loans/credit and the interest rate that 
must be paid on loans or credit card balances.
In general we expect a positive relationship between the 
ability to pay and the demand for a product. Such products 
are called normal goods. So an increase in the purchaser’s 
income generally leads to an increase in demand. Th
is is 
represented by a rightward shift in the demand curve from 
D
0
to 
D
2
 in 
Figure 2.14
. A decrease in the ability to pay 
would lead to a decrease in demand, and this would be 
represented by a left ward shift in the demand curve from 
D
2
to 
D
0
. Th
is more unusual case is that for inferior goods.