Ch 3 Demand_AP _ Reg_ _p_

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					Demand
                 Demand and Supply
Why do roses cost more on Valentine’s Day?

Why do TV ads cost more during the Super Bowl ($2.7                  million for 30
  sec.) than during Nick at Nite reruns?

Why do hotel rooms in Sun Valley, Idaho cost
  more in the winter than in the summer?

Why do surgeons earn more than butchers?

Why do pro basketball players earn more than pro hockey players?
                                                  “Econ, Econ”
Why do economics majors earn more than most other majors?

Why are some of you going to major in economics in college?

The answer to these and other economics questions boil down to the
  workings of supply and demand – the subject of this chapter.
                 Individual Demand
                                  To
               Market                     Demand
          “Bo”            “Mo”        “JO”

      D               D               D              D1 D2

 $3          +   $3          +   $3          = $3                     [Total]

 $2              $2              $2             $2


       35 40          39 45       26 30               100 115
                                                           115
   From “individual” demand to “market” demand
And, what if the price of this product decreases from $3 to $2?
A point to point movement on the same “D” curve is a “Change in QD”
And – what if this good prevents cancer, so we have an increase in “D” for it.
        Consumers “willingness to buy”
         Price decreases; QD increases
                           D
            P QD      $5


         $5    10     $4


          4    20     $3


          3    35     $2


          2    55     $1


          1    80       0 10 20   35   55
                           Quantity Demanded
                                            80


           …a specified time period
           …other things being equal
QD – how much will be purchased at a specific price [& date].
                               D   Reasons For Downsloping “D” Curve
                                   1. Income Effect –current buyers buy more.
                                   2. Substitution Effect– new buyers now purchase.
                                   3. Diminishing Marginal Utility - because buyers
iPhone                 [8GB]         of successive units receive less marginal utility,
                                     they will buy more only when the price is lowered.
$399.00
[with 2 yr contract]                              Change in QD
                                                  1. Price change
                                                  2. Movement
                                                     [up/down the demand curve]
Price         QD                                  3. Point to point [along the curve]
$250.00


                                               Inverse      relationship

                          QD1 QD2
              “D” refers to the “whole curve”. [“all prices”]
               “QD” refers to a “point on the curve”
                   based on a “particular price.”
                                                                           D
                                                                      P1
1. Income Effect                                                      P2
   •   When things are expensive, money buys less                          QD1 QD1
   •   When things are cheap, money buys more

2. Substitution Effect
   •    When apples are expensive and their
       substitutes (pears) are relatively cheap,
       I buy fewer apples and more pears

3. Diminishing Marginal Utility
   •   Each additional unit of an item purchased gives less marginal utility
       (happy points) than the previous unit. Therefore, the only way I will buy
       more is if the price is lower.
   •   Ex. When I’m hungry, I typically will buy 2 breakfast tacos. The
       reason I don’t buy a third taco is because the marginal utility of the
       third taco is less than the price of the taco. But, if the price of the taco
       is less than the marginal utility of the taco, then I will buy the third taco
Picture of
 Law of
Demand
       Elastic     or   Inelastic
       (Total Receipts Test)


$2

$1

                   Inelastic         Elastic
        20    30        40      50
Total Receipts Test          Total Receipts Test
20 x $2 = $40.00             20 x $2 = $40
30 x $1 = $30.00             50 x $1 = $50
11. Elasticity of D – the way price affects QD.
12. Elastic - QD that is very responsive to price.
13. Inelastic - a chg in price has little impact on QD.

Elastic (flexible) Demand
1. Substitutes (butter)
2. Luxury (mink coat)
3. Expensive (car)
4. Has durability (refrigerator)
5. Lasts a long time (gas-guzzling car)
Inelastic (inflexible) Demand
1. No substitutes (milk)
2. Necessity (insulin)
3. Inexpensive (safety pin)
4. No durability (pencil)
5. Lasts only a short time (bread)
Elastic Demand For Cassette Tapes

                               “TR” Test
                           $2.50x100,000=$250,000
             D             $1.50x600,000=$900,000
                                        +$650,000
                 -$1
                       .




  Think of “responsiveness” as “flatness”.
      D
          “TR” Test
          $2 = $30 bil.
          $1 = $20 bil.
              -$10 bil.
-$1


             +25% QD
Change in   “Demand”            [curve]
          [“TIMER”]
     Consumers change
     their minds at each
     and every price.

                           Based on good or bad
                           publicity about OJ.
                  .




                           16 oz. Orange juice = 220 calories
                           16 oz. Tomato juice = 78 calories
  Quantity Demanded                vs. Demand
Quantity Demanded [QD] is triggered by a price chg.
 The quantities of a good or service that people will
 purchase at a specific price at a given time.

Demand [D] is triggered by “TIMER” [non-price].
 A schedule of the total quantities of a good or service
 that purchasers will buy at different prices at a
 given time.
Demand is a bunch of QD’s strung together.
“Demand Shifters” [TIMER]
1. Taste [direct]
2. Income [normal-direct] [inferior-inverse]
3. Market Size [number of consumers-direct]
4. Expectations [of consumers about future *price-direct,
   about future availability-inverse, or about future income–direct.
5. Related Good *Prices [substitutes-direct] [complements-inverse]
                           D1 D2            D                D1
                                       P1
 D3 D1 D2              P
                                                             D2

                                       P2                P
                         Complement
P                                           QD1 QD2          Substitute
                          [inverse]                           [Direct]
                           Butter           Bread            Bagels
                                Change in “D” [curve]
                                1. Non price change [“TIMER”]
                                2. Whole “D” curve shifts
                                [There is a change in “QD” but it is
                                not caused by a change in “price.”
     QD3 QD1 QD2                [QD-”single price”; D-”all prices”]
      D1 D2

      D3
  P

                                              Mini
                                                              Hip Huggers
                              Bell Bottoms   Skirts Platforms
      QD3 QD1 QD2

1. An “Increase in Taste” shifts the D curve right
 a. The Nehru jacket came & went in 6 months.
 b. Jordache jean demand created by TV
 c. Leisure suits and bell bottoms.
 d. Technological change may cause
  consumer taste to change[slide rules].
Increase in demand for dark chocolate after studies
revealed that there were health benefits from eating it.
Scientists have discovered that smokers who ate dark chocolate had
less hardening of the arteries and a lowered risk of blood clots.




    D1   D2

P
      Advertising Can Shift “D” [& also impact QD]
       D1
                     D2



$45




                   QD1        QD2
                               Spam
     Steak
                   D1 D2
More income                    Less income
  results in                     results in
more demand    P               more demand
  for steak;                     for spam;
less demand                    less demand
  for spam.                      for steak.
                     QD1 QD2
           2. Change in Income
Normal Good – goods whose demand
   varies directly with income.
Inferior Good – goods whose demand
   varies inversely with income.
Butter, filet, steel-belts, new clothing & new cars
                       v.
Margarine, spam, used tires, old clothing & old cars


                        Demand
                          For
                                       Demand
       Income            Spam             For
                                        Steak
                D1 D2


           P
More demand
for both spam
and steak.        QD1 QD2
 can increase/decrease from
economic decisions, advertising, and
government political decisions (China).
Ex: The large “baby boom” of 1946-64
increased the demand for baby supplies.
An increase in life expectancy increased
demand for for medical care, retirement
communities, and nursing homes.
               Increase in # of consumers
             If the iPod-Touch is expected to
             increase in price from $299 to $399.

              D1 D2
iPod-Touch
         P


                    QD1 QD2
car



  Consumer expectations about future product
  price, future availability, & future income.

  Ex: When the Korean War broke out in the
  summer of 1950, new car sales boomed (also
  washers and refrigerators) out of the
  expectation of a production stoppage like
  during WWII. None occurred but it was the
  expectation that affected new car demand.
      D1 D2           D                  D1
                 P1                  D2
  P
                 P2                  P
  Complement          QD1 QD2            Substitute
   [Inverse]                              [Direct]
Gangsta Grills   Chrysler 300s           Toyotas



                           MV X PQ
There are three types of goods.
1. Independent goods – price change
   of one has no impact on the other.
   Ex: fishhooks & pantyhose or salt & shoelaces

2. Substitute goods(“competing goods”)               D1
  - price change of one affects the                   D2
    demand of the other directly.
 Ex:   7Up & Coke or Miller & Bud                    QD2 QD1


3. Complementary goods(“go together”)
   - price change of one affects the
   demand for the other inversely.
                                           Peanut butter & jelly
                     D1 D2



          Camera         QD1 QD2    Film   Cereal & milk Coffee & donuts
[Increase in price of one; increase in “D” of the other]

                                            D1 D2
           D                            P
      P2
                                             QD     QD

      P1
               QD2   QD1
           Price                       Demand
               Of                           for
           7UP                        Dr Pepper
[Decrease in price of one; increase in the “D” for the other]
       P1
       P2

                                        D1 D2
            QD1 QD2

     Car Prices
                                    P

                                             QD   QD

                               Gasoline Demand
                                 No change
                                  in price
                                                   I’m making more
                                                   money without
                                                   dropping my prices.


   They are so cheap that
  even dogs are buying cars
                Substitutes – Direct
[Increase in price of one; increase in “D” of the other]
                                                            D2
                                                       D1
           D                                       P
      P2
                                                        QD       QD
      P1
               QD2   QD1


         Price of                                Demand for
                                                Microsoft’s Zune
       iPod Video
                             1977, Bill was
                              arrested for
                            running a stop
                           sign and driving
                           without a license.
 Substitutes - Direct


                D1   D2




 Price           Demand
  Of               for
Chicken         Turkey
Although both monitor & laptop QDs changed, it is still
a “Change in D” for those two, because the QD changes
were not triggered by a change in price.
The price of desktop computers did change so there is a
“Change in QD” for desktop computers.
        D1 D2             D               D1
                     P1                 D2
    P
                     P2               P
     Complement        QD1 QD2            Substitute
      [inverse]         Desktop            [Direct]
     Monitor           Computers          Laptops
  Substitutes - Direct




                 D1   D2




Price Of       Demand
                for
Windows         Apple
Computers      Computers
 Substitute/Complement Relationships
      D                                      D1
              “Substitutes”
P1                                           D2
                                         P
P2                  Price        Price
                   Decreases Decreases

         QD1 QD2                              QD2 QD1
     Hot Dogs [DIRECT] Hamburgers
                             .




     D        “Complements”                   D1    D2
              Price    Demand
P1          Decreases Increases P

P2

      QD1 QD2                                     QD1   QD2
     Pancakes         [inverse]                   Syrup
     “TIMER”
                            P
Tastes [direct]
Incomes
  -Normal [direct] & Inferior[inverse]
Market Size(# of consumers) [direct]
Expectations of consumers about
 [future price-direct; future
 income [direct]; and availability [inverse]
Related Good Price Changes
 [substitutes-direct; complements-inverse]

                                Helmets
  Increase in “QD”                                        Decrease in “QD”
[caused by a “decrease in price”]                         [caused by an “increase in price”]
       D                                                             D
  P1                         1. Price change
                             2. Movement                       P2
  P2                         3. Point to point                  P1
                             [“Snap   shot of 1 pt in time]

           QD1 QD2                                                       QD2 QD1
                  Change in “D” [“TIMER”]
       D1 D2                  1. Non-price
                                                                         D1

   P                          2. Whole curve                             D2
                              3. Shift                               P
                              [“Time passes”]
       “Increase in D”                                                   “Decrease in D”
What could cause an “increase in Demand?”         5. Expectations of a shortage
1. Increase in taste                              6. Expectations of a price increase
2 .Increase in income [normal good]               7. Expectations of positive future income
3. Decrease in income [inferior good]             8. Incr in price of a substitute for product “X”
4. Increase in market size [# of consumers]       9. Decr in price of a complement of product “X”
                                             Change in D [curve]
  Change in QD                         [non-price change/shift/whole curve]
[price change/movement/pt to pt]
                                       5 Demand Shifters [“TIMER”]
                                       1. Taste [direct]
                                       2. Income [normal - direct] [inferior - inverse]
                                       3. Market Size [number of consumers - direct]
                                       4. Expectations [price, income, & availability]
                                       5. Related Good Price changes
                                          [substitutes - direct] [complements - inverse]

              D                                     D3 D1 D2
         P1

         P2

              QD1 QD2                                 QD3 QD1 QD2
[“Moving” along the crab demand    curve”   “Shifting the crab demand curve”
 because of a crab price change]

+/- QD/D
___QD1. Crab sales are affected by a drop in crab prices.
 + ___
 + D
___ ___ 2. An increase in income causes the demand curve for crab to shift.
+/- D/QD              Graph The Black Boldfaced Items
 + D
___ ___ 1. A population increase affects sales of Pepsi Colas.
 - D
___ ___ 2. Consumer incomes in the city of Plano decrease,
           with the result that jewelry sales are affected.
___ QD 3. A camera store has a sale that features 25% off the price of all cameras.
 + ___
 - ___
___ QD 4. Texas imposes a 15% luxury tax on the sale of sailboats.
 + D
___ ___ 5. A frost in Florida destroys 60% of the orange crop and increases
           expectations about a future price increase of oranges.
 - D
___ ___ 6. Consumers expect the prices of digital cameras to decrease next month.
 - D
___ ___ 7. The sale of DVDs is affected by a 20% increase in the price of DVD players.
                         D                       D1
                    P2
    DVD                                                    [Complements -   INVERSE]
   Players          P1
                                            DVDs
 + ___ 8. The sale of buns is affected by a 20% decrease in the price of
                         QD2 QD1
___ D
                                      D               D1
             hamburger meat.
                                P1                          [Complements -   INVERSE]
          Hamburger
            meat                P2
                                                       Buns
 + D                                  QD1 QD2
___ ___ 9. The sale of Kangaroo meat in Europe [Roo Steak] is affected
          by a 25% increase in the price of beef.
                   D                        D1
             P2                                               [Substitutes -   DIRECT]
             P1
                               Beef
                                           Kangaroo meat
+ QD 10. Dunkin Donuts lowers the price of donuts & experiences a change in sales.
___ ___
                  QD2    QD1
     D
                        Change in QD
P1
                        Price Change
P2
                        Point to Point
          QD1 QD2       Movement
     D    [INVERSE]
P2                    What is not held constant
P1                     in these two graphs? Price
         QD2    QD1
               “Change in Demand”
                                                  D1
     D1 D2                                        D2
P                                             P
                       Do not confuse these
      Q1 Q2            two with “Chg in QD”        Q2 Q1
                Change in Demand
                Non-Price Change
                Whole Curve
                Shift
  [D – “TIMER; QD – price change [inverse]
                                        MP3 Player Phone
                                      [stereo sound, downloadable
                                      sound games and ring tones]
 A
__1. Which will cause an “Increase in D”      for   MP3 Player phones?
   a. increase in income          c. increase in the price of MP3 Player phones
   b. decrease in income          d. decrease in the price of MP3 Player phones
___2. Which will cause an “Increase in QD” for MP3 Player phones?
 C
   a. decrease in income          c. decrease in the price of MP3 Player phones
   b. increase in income          d. increase in the price of MP3 Player phones
___3. Which will cause a “Decrease in D” for Projectors?
 C
   a. increase in the price of projectors          c. decrease in # of consumers
   b. decrease in the price of projectors          d. increase in projector taste
 A
___4. Which will cause a “Decrease in QD” for Projectors?
   a. increase in the price of projectors          c. decrease in # of consumers
   b. decrease in the price of projectorsd. increase in projector taste
       QD & D Practice Quiz[Snickers]
1. What would cause an “increase in QD” for Snickers?
  a. increase in price of Snickers b. decrease in price of Snickers
  c. decrease in income            d. increase in number of consumers
2. What would cause an “increase in D” for Snickers?
  a. increase in taste                  b. decrease in price of Snickers
  c. decrease in income                 d. increase in the price of Snickers
3. What would cause a “decrease in QD” for Snickers?
 a. increase in taste b. decrease in price of Snickers c. increase in price of Snickers
4. What would cause a “decrease in D” for Snickers?
 a. decrease in income b. increase in taste c. decrease in price of Snickers
5. An “increase in the price of Butterfingers would
  cause a(n) (increase/decrease) in (QD/D) for Snickers?
                                    NS 1-10
1. (Demand/Supply) is identified as quantities consumers are willing
   and able to buy at various prices during a given time period.
2. The law of demand says that price & QD are (directly/inversely) related.
3. The most important variable influencing decisions to produce and
   purchase goods is (technique/price). (Price/income) is not held
   constant when moving along a stable demand curve.
4. Income effect-the increase or decrease in purchasing power
   brought on by a change in (taste/market size/price).
5. Substitution effect – tendency to substitute a (higher/lower)
   -priced product for a more expensive product.
6. Diminishing marginal utility – utility, or (determination/anger/satisfation)
   decreases as more of the same product [Snickers] is consumed.
7. The law of demand refers to a (movement/shift) along a demand curve.
8. Substituting chicken as the price of steak goes up is an example
   of the (income/substitution) effect.
9. When the price of caviar falls, the purchasing power of our money income
  rises & thus permits us to purchase more caviar. This is the (income/substitution) effect.
10. The demand (curve/schedule) is a numerical tabulation showing QD at each price.
  The demand (curve/schedule) is a graphical representation of the law of demand.
                            NS 11 - 20
11. Elasticity of demand–the way price affects (attitude/quantity/market size).
12. (Inelastic/Elastic) demand – demand that is very responsive to price.
    [A small price increase causes a large decrease in quantity demanded.]
13. (Inelastic/Elastic) demand-when a change in price has little impact on QD.
14. The 3-item test for elastic demand are substitutes, luxury items,
      and (inexpensive/expensive) items.
15.   The 3-item test for inelastic demand are no substitutes,
      necessities, and (inexpensive/expensive) items.
16.   Expensive cars have (inelastic/elastic) demand.
17.   Pepsi Cola has (inelastic/elastic) demand.
18.   Insulin has (inelastic/elastic) demand.
19.   The elastic demand curve is more (horizontal/vertical). [much change]
20. The inelastic demand curve is more (horizontal/vertical). [not much change]
                           NS 21-26
21. With the invention of the calculator, the demand curve for the
             slide rule (increased/decreased).
22. When Forest Gump went to China & the U.S. followed by
   opening up relations with China, the demand curve for
   Coke (increased/decreased).
23. An increase in income would (increase/decrease) the demand
   for used clothing. [inferior good]
24. A decrease in income would (increase/decrease) the demand
   for lobster. [normal good]
25. A decrease in the price of product X [lumber] will (incr/decr)
   the demand for the complementary product Y. [nails]
26. After Brooke Shields[15] did her national TV ads[“Nothing comes
   between me and my Calvin’s”], the “D” curve moved (right/left).


                     $45
                             NS 27-38
27. An increase in the price of Pepsi causes the
   demand curve for Coke to move to the (right/left).
28. If there is a sale on shirts, the demand curve for ties will move
    to the (right/left).
29. If a man’s workplace is about to close down, his demand
    curve for major purchases would move to the (right/left).
30. If a cure for lung cancer were found, the demand curve for
    cigarettes would move to the (right/left).
31. If the price of pancakes decreases, the demand
   for syrup, a complement, will (increase/decrease).
32. If the price of butter decreases, the demand for margarine will (incr/decr).
33. A “change in QD” is caused by (price change/TIMER) [a “movement”]
34. A “change in D” is caused by (price change/TIMER) [a “shift”]




                                                                  e
 “Econ, Econ”. Let
tell you about econ.




      The End
1. Madonna gave a concert at the AAC after doubling the ticket
    price and experiencing a change in anticipated attendance.
2. A decrease in taste causes the demand for lobster to shift.
3. A 20% increase in the price of Pepsi affect the sale of Coke.
4. Consumers expect the price of cell phones to increase 25% next month.
5. The sale of Ford F150s is affected when the U.S. begins trading with Cuba.
6. New autos decrease in price by 20% & the sale of gasoline is affected.
7. Victoria’s Secret increases the price of its thongs by
   40% and experiences a change in the volume of sales.
8. Britney Spears triples the price of her album,
   “Oops, I flunked Econ Again,” and sales are affected.
9. A drought in Texas destroys 40% of the state’s peaches & increases
     consumer expectations about a future price increase of peaches.
10. A 15% decrease in the price of motorcycles affect the sale of helmets.
   Taste [direct]
   Income [normal-direct] [inferior-inverse]
   Market Size [# of consumers-direct]
 1.–QD 2. –D 3. +D 4.+D                                         5.+D
   Expectations [price-direct] [income-direct] [availability-inverse]
 6.+D           7.–QD           8.–QD           9.+D           10.+D
   Related Good Price Changes [subs-direct] [complements-inverse]
1. Christina gave a concert at the AAC after lowering the ticket
    price and experiencing a change in anticipated attendance.
2. An increase in taste causes the demand curve for lobster to shift.
3. The sale of coke is affected by a 20% decrease in the price of Pepsi.
4. Consumers expect the price of XBOX to decrease 25% next month.
5. The sale of Dr Pepper is affected when the U.S. goes to war with China.
6. New SUVs decrease in price by 30% & the sale of gasoline is affected.
7. Victoria’s Secret decreases the price of its teddies by
   50% and experiences a change in the volume of sales.
8. The Spice Girls lower the price of their album, “Oops,
   We Actually Passed Econ,” and sales are affected.
9. A freeze in California destroys 70% of the state’s oranges and increases
      consumer expectations about a future price increase of oranges.
10. A 50% increase in the price of bread affect the sale of bagels.
   Taste [direct]
   Income [normal-direct] [inferior-inverse]
 1.+QD 2.+D                      3. -D
   Market Size [# of consumers-direct]           4.-D             5. -D
   Expectations [price-direct] [income-direct] [availability-inverse]
              7.+QD 8.+QD 9.+D 10.+D
 6.+D Good Price Changes[subs-direct] [complements-inverse]
   Related
Review of Demand
                               D   Reasons For Downsloping “D” Curve
                                   1. Income Effect –current buyers buy more.
                                   2. Substitution Effect– new buyers now purchase.
                                   3. Diminishing Marginal Utility - because buyers
iPhone                 [8GB]         of successive units receive less marginal utility,
                                     they will buy more only when the price is lowered.
$399.00
[with 2 yr contract]                              Change in QD
                                                  1. Price change
                                                  2. Movement
                                                     [up/down the demand curve]
Price         QD                                  3. Point to point [along the curve]
$250.00


                                               Inverse      relationship

                          QD1 QD2
              “D” refers to the “whole curve”. [“all prices”]
               “QD” refers to a “point on the curve”
                   based on a “particular price.”
“Demand Shifters” [“TIMER”]
1. Taste [direct]
2. Income [normal-direct] [inferior-inverse]
3. Market Size [number of consumers-direct]
4. Expectations [of consumers about future price-direct,
   about future availability-inverse, or about future income–direct.
5. Related Good Prices [substitutes-direct] [complements-inverse]
                            D1 D2            D                D1
    D3 D1 D3            P
                                        P1                    D2

                                        P2                P
                         Complement
P                         [inverse]
                                             QD1 QD2          Substitute
                                                               [Direct]
                            Games              PS3             XBOX
                            for PS3
                                 Changes in “D” [curve]
                                 1. Non price change [“TIMER”]
                                 2. Whole “D” curve shifts
                                 [There is a change in “QD” but it is
                                 not caused by a change in “price.”
      QD3 QD1 QD2                [QD-“singe price”; D-”all prices”]
A decrease in taste                 An increase in taste
for videos results in a             for DVDs results in an
decrease in demand.                 increase in demand.

                          D1 D2

                          D3
                   P


                          QD3 QD1 QD2
       New Cars         Used Cars
             D1    D2
 More income                 Less income
   results in                  results in
more demand   P             more demand
for new cars;               for used cars;
 less demand                 less demand
for used cars.              for new cars.
                  QD1 QD2
This is what we told one billion Chinese, as new potential
consumers, when we opened trade relations with them in 1972.



                    D1 D2


                P                               New Cars
More demand
for both normal
& inferior goods
                           QD1 QD2              Used Cars
            If Steve Jobs responds to iRate customers who
            bought the iPhone at $599 and says, “iSorry,
$399        we will raise the price back to $599 in 3 weeks.”
                    D1 D2
                                 Buy it now to save money.
       iPhone
                P


                         QD1 QD2
Let’s say that we are coming out of recession & consumers
feel secure about their jobs. [Positive future income]

                   D1 D2


               P


                         QD1 QD2
Let’s say that we are going into a recession and consumers
don’t feel secure about their jobs. [Negative future income]

                    D1
                    D2


                P


                     QD2QD1
    D1 D2         D             D1
             P1                 D2
P
             P2             P
Complement        QD1 QD2       Substitute
 [Inverse]                       [Direct]
     Milk         Cereal        Pop Tarts
     D
                        D1 Dr Pepper
P1          Coke       D2

P2


          Substitutes - Direct
     D                      D2
         Motorcycles   D1
P1

P2

         QD1 QD2        Helmets
     D
                        Change in QD
P1
                        Price Change
P2
                        Point to Point
          QD1 QD2       Movement
     D    [INVERSE]
P2                    What is not held constant
P1                     in these two graphs? Price
         QD2    QD1
               “Change in Demand”
                                                  D1
     D1 D2                                        D2
P                                             P
                       Do not confuse these
      Q1 Q2            two with “Chg in QD”        Q2 Q1
                Change in Demand
                Non-Price Change
                Whole Curve
                Shift
  [D – “TIMER; QD – price change [inverse]
           [Revised from previous]
__1. Which
 B           of the following will cause an “Decrease in D” for   iPod nanos?
   a. increase in income       c. increase in the price of iPod nanos
   b. decrease in income       d. decrease in the price of iPod nanos
 D
___2. Which will cause an “Decrease in QD” for iPod nanos?
   a. decrease in income       c. decrease in the price of iPod nanos
   b. increase in income       d. increase in the price of iPod nanos
 D
___3. Which of the following will cause a “Increase in D” for HDTVs?
   a. increase in the price of HDTVs            c. decrease in # of consumers
   b. decrease in the price of HDTVs         d. increase in HDTV taste
 B
___4. Which of the following will cause a “Increase in QD” for HDTVs?
  a. increase in the price of HDTVs     c. decrease in # of consumers
  b. decrease in the price of HDTVs     d. increase in IPOD taste
      QD & D Practice Quiz                                               [“Revised”]
1. What would cause a “decrease in QD” for KitKats?
  a. increase in price of KitKats      b. decrease in price of KitKats
  c. decrease in income                d. increase in number of consumers
2. What would cause a “decrease in D” for KitKats?
  a. increase in taste                  b. decrease in price of Kitkats
  c. decrease in income                 d. increase in the price of KitKats
3. What would cause an “increase in QD” for KitKats?
 a. increase in taste b. decrease in price of KitKats c. increase in price of KitKats
4. What would cause an “increase in D” for KitKats?
 a. increase in # of consumers b. decrease in taste b. decrease in price of KitKats
5. A “decrease in the price of Reese’s would
  cause a(n) (increase/decrease) in (QD/D) for KitKats?
        Elastic/Inelastic Demand




                    .




Go over Total
Receipts Test
For Elastic &
Inelastic

				
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