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# Demand

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• pg 1
```									      Before we begin,
work with your tablemates to plot the
following points. After you’re done,
connect the dots with a curved line.

Then, take ONE of your papers
to Ms. Meadows
to be graded.
Make sure everyone’s info. is the same!
What is Demand?
21-1
The consumer’s
• desire  do you want it?
• willingness  will you pay the price?
• and ability  do you have the \$\$?

to buy a good/service
What is the Demand Schedule?
Turn to p. 571. This info. tells us how many
goods/services you will purchase
at each price they are being sold.

The demand schedule is on the (upper) left.
It is the “list” of info.
By looking at the demand schedule,

• YOU are willing to buy:
– 1 video games for \$40
– but 3 videos for \$10

• Hmmmm? Why is that??
– Because most people like a bargain! You’re
also getting more goods for your money!
What is the Demand Curve?
It’s basically the same as the demand
schedule!
The only difference is that it is in the form of
a “graph.”
On page 571, it is on the (upper) right.

• YOU are willing to buy:
– 1 video games for \$40
– 1 video games for \$30
– and 3 videos for \$10
Again!
• the list/chart  is the demand schedule
• the graph  is the demand curve

Both have the EXACT same info. that tells
how much you are willing to BUY at each
price!
Another Example:
This is why the demand curve slopes downward!

• As price goes down, quantity goes up!
•   \$50
•   \$40     1 pair of shoes            Look at the demand curve
again for video games on
•   \$30                                p.571. When you plot the
points, it slopes down b/c
•   \$20                                WE LIKE WHEN
THINGS GO ON SALE!
•   \$10
•   \$5                         5 pairs of shoes!!
So, the Law of Demand
says…

Price & Quantity
work in opposite directions

• As price goes down, quantity goes up! b/c we like a sale!
• As price goes up, quantity goes down! b/c we don’t like
expensive goods!
Individual Demand
vs.
Market Demand
• indiv. demand = one consumer’s demand
How many games will YOU buy?

This is YOU!

• market demand = many consumers’ demand
How many games will ALL boys buy?
How many games will ALL 10th graders buy?
How many games will ALL girls buy?
So, on page 571…
The two boxes at the upper, top represent
INDIVIDUAL DEMAND.

The two boxes at the lower, bottom represent
MARKET DEMAND.

Remember, the ones on the left are schedules.
The ones on the right are curves.
Looking at the market demand on
p.571
• consumers will buy 150 video games for \$40

• But, consumers will buy 300 video games for
\$10
What is Utility?
The pleasure, usefulness, satisfaction you get from a product

•   I like this product!
•   This product is useful to my tummy!
•   I get satisfaction from this product!
•   Therefore, I will BUY this product!
Unfortunately, we will soon get tired of eating
this product after 3 hours.

• The utility we get from consumption of
this pizza usually changes as we more &
more of it.
By the 6th slice of pizza,
your utility ( pleasure/satisfaction)
has usually decreased.
Therefore,
your need for it…your hunger for it…
has diminished (or decreased).

This is diminishing marginal utility!!
What are the
Factors that Affect Demand?
21-2

In other words,
what influences your decision to buy a
product?
Price?
Color?
Style?
?????????????????????
Remember…
Demand is your
YOUR
•desire
•willingness
•ability

to buy a good/service
Factor #1: Changes in Population
Increase in demand:                Decrease in demand:
• If a new apartment building is   • If our school or even Baptist
built next to our school, what     Hospital closes down,
businesses would see an            businesses around here would
increase in demand?                see a decrease in demand.
• = fewer customers, demand
goes down 
• Hardees, the BP gas station…
= more customers, demand goes
up 
Factor #2: Changes in Consumers’
Taste (or style)
Increase in demand:                              Decrease in demand:
• When goods are                                 • When goods go out of
popular!                                         style…
• What’s “in” this year?                         • What’s old?
–   Skinny jeans, off-the-shoulder shirts,     –   Platform shoes, jersey dresses, baggy
etc.                                           jeans

Few consumers!

Lots of consumers! Demand goes up!                            Demand goes down!
Factor #3: Changes in Consumers’
Income (\$\$\$)
Increase in demand:      Decrease in demand:
• people have \$\$, they   • people don’t have \$\$,
buy!!                   they don’t buy. 

Demand
goes
Demand
goes
Factor #4: Changes in Consumers’
Expectations
Increase in demand:                Decrease in demand:
• a new product comes out, and     • you see on TV that a new iPod
everybody goes to buy it b/c       or cell phone is coming out, so
you wait patiently b/c you
people expect that the newer
expect that the newer product
version is way better than the     will be so much better than the
old one.                           old one that’s out now.
Demand                                     Demand
goes                                       goes
for                                        for
iPods                                      CDs
Factor #5: Changes in Substitutes
Increase in Demand                        Decrease in Demand
• Items that can be substituted…          • When the price of one goes up,
(drink orange juice instead of milk)     the price of the substitute also
(eat waffles instead of pancakes)        goes up b/c the 2nd product
• When the price of one goes                wants to keep up with the
down, the price of the                    competition. But, consumers
substitute also goes down b/c             don’t like when prices go up.
the 2nd product doesn’t want to           Demand goes
lose customers. Demand goes

versus
versus
Factor #6: Changes in Complements
• Items that are used                      Price of DVD goes
together…
–   sugar & Kool-Aid
–   waffles & syrup
–   lamp & light bulbs
–   DVDs & DVD players

•When the price of one                   Price of DVDs goes
goes up, the price of the
complement goes down.

(Usually, consumers aren’t willing to pay for two goods increasing at the same time!)
Elastic vs. Inelastic Demand
First, remember that anything that is “elastic” can be
stretched and it’s flexible.
Elastic Demand:
• when the price changes, we are not affected by it
b/c we can find a substitute to replace that
particular good or service.           price of coffee

The price can go way up, and demand will change or
stretch b/c we will buy a cheaper coffee…demand
changed…demand stretched.
Inelastic Demand
Anything that is “inelastic” can’t be stretched, it’s not
flexible, it stays the same & remains still.

Inelastic Demand:
• when price changes, we are affected b/c there
isn’t a substitute to replace the item needed

•price of prescription medicines
The price can go way up, and demand
will not change or stretch. Demand
will stay the same b/c people need their
medicine…inelastic demand.
Again…
Demand is your
YOUR
•desire
•willingness
•ability

to buy a good/service
You! You! You!

You are the consumer!
You are DEMAND!

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