Demand

1. Demand Chapter 4, Section 1, 2

2. What is “Demand?” • Willingness to buy a product and ability to pay for it.

3. Demand Schedule • List of quantity that will be demanded for different market prices.

4. PRICE D E M A N D Law of Demand • Quantity demanded and price have inverse relationships. • As price falls, consumers buy more.

5. Demand Curve • Graph that shows how much will be purchased at each price. • Graph points on D Schedule

6. Quantity Demanded • Points on the curve • Show how much demanded at ONE price.

7. Application pg 101& 103 • Create a demand schedule showing how many pizzas you would buy per month at the following prices: $25, $20, $15, $10, $5 • Graph those points and draw the demand curve.

8. Changes in “qd” • “change in the # products consumers buy because of a change in price.”

9. Change in Demand • What conditions would arise to make you change (increase or decrease) your desire to buy a product? • When conditions change, the entire demand curve changes.

11. Changes in Demand • Consumer Taste • Change in style • Consumer Income • Change $ people make • Substitutes • Compliments

12. Price of Substitute • Substitutes – products that can be used in place of another product.

13. Price of Compliments • Compliment – two products used together

14. Elasticity of Demand Chapter 4, Section 3

15. Elasticity of Demand • Describes how responsive consumers are to price changes.

16. Elastic Demand • Elastic – when changing price has a large change in quantity demanded.

17. Elastic Demand

18. Inelastic Demand • Inelastic – change in price makes a small change in quantity demanded.

19. Inelastic Demand

20. Pricing Policies • Governments tax inelastic goods because the increase in price does not change the quantity demanded.

21. Determinants What determines Demand Elasticity?

22. Are there Substitutes?

23. Does it use large portion of Income?

24. Is it a necessity?

25. Yes No Yes No No No Yes =elastic No = inelastic Small Small Large Small Small Large Large =elastic Small = inelastic Lux. Nec. Lux. Nec. Nec. Lux. Luxury =elastic Necessity = inelastic Elast. Inel. Elast. Inel. Inel. Elast.

26. Demand Poster • Pick a product • Create a Demand Schedule using at least 6 different prices. • Draw your Demand Curve • Identify 2 Quantity Demanded Points • Describe a situation where DEMAND would increase or decrease. • Illustrate the change in Demand on your curve. • Identify how Elastic or Inelastic Demand for your product is using a continuum.

27. Supply Chapter 5

28. Supply • Willingness and ability of producer to offer goods for sale.

29. Supply Schedule • Table that shows how much a producer will offer for sale at market prices.

30. PRICE SUPPLY Law of Supply • Price and Supply have a parallel relationship • Producers are willing to sell more at a higher price.

31. Supply Curve • Graph that shows how much a producer will offer at each price.

32. Quantity Supplied • A point on the curve. • How much supplied at ONE price.

33. Change in Qs • “change in the # products producers are willing to sell because of change in price.”

34. Change in Supply • When something makes producers offer different amounts for sale at every price.

36. Input Cost • Increase or decrease in cost of the factors of production.

37. Technology • New technology decreases the cost of production.

38. Number of Sellers • More sellers = more supply

39. Elasticity of Supply • Elastic - changes in price cause large change in quantity supplied. • Inelastic – change in price causes small change in qs.

40. Equilibrium Price • Market price when qs = qd.

41. Surplus • Qs > Qd

42. Shortage • Qs < Qd

46. Price Ceiling • Maximum price sellers can charge. • Set below equilibrium • Shortage will occur.

47. Price Floor • Minimum price buyers must pay for product • Set above equilibrium • Surplus will result.