Quantity demanded by fjzhangxiaoquan

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									Supply & Demand #2:




 Law of Demand
            Remember…
• Consumers want
  to maximize their
 utility
 (satisfaction)
              Demand
• What consumers are WILLING (want) &
  ABLE (have the ability) to buy at a
  possible price during a given a period




• Quantity demanded: amount demanded
Would you buy this for…..?

            • $5?
            • $3?
            • $1?
Law of Demand
• Quantity demanded varies inversely
  (opposite) w/ price:
   – Price goes up, demand goes down
   – Price goes down, demand goes up

• If pineapples go on a sale, what happens to
  the quantity demanded?
Factors of Demand:
• Substitution Effect – goods and
  services that can used to meet your
  demands
  – EX: both steak and chicken can meet your
    need for food. Which one has a higher
    quantity demanded?
Pepsi: $1                 Coke: 75 cents




Which one will have a higher quantity demanded?
Income Effect
• Money income: # of dollars in a given
  period
• Real income: what you can actually
  purchase w/money income
   – If prices remain increase & your money
     income is the same – you will demand
     less (your real income is reduced)
 Diminishing Marginal Utility
• Marginal Utility: extra
satisfaction from each
additional unit
• More you consume – your marginal
  utility diminishes (reduces)
  – Why don’t you watch 3 movies on 1
    night?
  – Why don’t you take 2 copies of the
    same newspaper?
            Question
             time!

• Cupcakes cost $1.50 a piece and
  doughnuts are selling for 85 cents
  each. Which one will have a higher
  quantity demanded?

• These two products are called
  what…?

								
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