Micro 2.1/Macro 1.4 Demand

This video covers topic 2.1 of the AP Microeconomics and 1.4 of the Macroeconmics Course Exam Descriptions (CED). It includes the income effect, substitution effect, diminishing marginal utility, the difference between demand and quantity demanded, and non-price determinants of demand.
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I would like to acknowlege the work of Dick Brunelle and Steven Reff from Reffonomics.com who’s work inspired many of the review games on ReviewEcon.com. I would also like to thank Francis McMann, James Chasey, and Steven Reff who taught me how to be an effective AP Economics teacher at AP summer institutes; as well as the countless high school teachers, and college professors from the AP readings, economics facebook groups, and #econtwitter.

[@ItzK02]

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[@ReviewEcon]

Good luck! 😄

[@American_2]

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[@ReviewEcon]

Good to help! Good luck on the test!

[@theempowerer5718]

thank you so much for this review, helping me learn some of the things i missed.

[@ReviewEcon]

You're very welcome! Good luck with your studies!

[@joosh7380]

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[@ReviewEcon]

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[@raiyangamer8741]

i will give Eco edexcle unit 1 and 2 in october 2024 your video are helpful thanks.Please upload Unit 2.

[@ReviewEcon]

Unit 2 is already uploaded. Check the unit 2 playlist at KZbin.com/ReviewEcon. Good luck!

[@reacher22.and.ryan23]

2:15 I’m incredibly lost on how that was calculated. Same with the 0.50$

[@ReviewEcon]

In that example I have $10 of income. If candy bars are $1 each, the $10 is worth 10 candy bars. If candy bars are $0.50 each, the $10 is worth 20 candy bars. That is the income effect. When prices fall, your income buys more and when prices rise, your income buys less. I hope that helps!

[@reacher22.and.ryan23]

@@ReviewEcon mostly. I still don’t understand how the bars that are 0.50 each will make my 10 worth into 20

[@ReviewEcon]

@@reacher22.and.ryan23 when you have $10, you can buy 10 candy bars when they are $1 each ($10/$1). When candy bars are $0.50 each, your $10 buys 20 candy bars ($10/$.50). And if candy bars cost $2 each, $10 buys just 5 ($10/$2). This is called the income effect. Changes in price change the purchase power of your income.