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The Law of Demand

The Law of Demand. Objectives Explain the law of demand and how a demand schedule is represented in a demand curve. Understand the difference between and individual and a market demand curve. Law of Demand. Key Terms Demand Quantity demanded Law of demand Demand schedule Demand curve

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The Law of Demand

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  1. The Law of Demand Objectives Explain the law of demand and how a demand schedule is represented in a demand curve. Understand the difference between and individual and a market demand curve.

  2. Law of Demand • Key Terms • Demand • Quantity demanded • Law of demand • Demand schedule • Demand curve • Individual demand curve • Market demand curve

  3. How many coffees would you buy in a week if your coffee at Starbucks cost $8?

  4. Law of Demand • Demand • Relationship between price and quantity demanded for a good or service, when other variables are held constant. • The buying side in a market • Quantity demanded • The amount of goods and services purchased at a given price.

  5. Law of Demand • Law of demand • There is an inverse relationship between the price of a good or service and the quantity buyers purchase • Guided by self interest • Demand schedule • A table that lists the quantity of a good or service consumers purchase at various possible prices

  6. Bob’s Demand Schedule for DVDs Demand schedule: A table that lists the quantity of a good or service consumers purchase at various possible prices

  7. Law of Demand • Demand Curve • Formed by the line connecting points that represent possible combinations of price and quantity purchased by consumers • A summary of buying intentions

  8. Bob’s Demand Curve for DVDs

  9. Market Demand • Individual demand curve (D1) • The demand for a single consumer • Market demand curve (Dtotal) • Sum of all the individual demand curves in a market

  10. Market Demand Schedule for DVDs

  11. Market Demand Curve for DVDs

  12. Think/Pair/Share • Create an individual demand schedule (weekly) for each of the following goods at the provided price increments: • School Lunch $2, $4, $6, $8 • Bottled Water $1, $3, $5, $7 • DVD/BluRay $5, $10, $15, $20 • With a partner combine your individual demand to create a market demand schedule for each product. **Remember to hold all other variables constant**

  13. Review • True or False: The concept of demand is based on the responses of sellers to price changes False

  14. Review • True or False: A market demand curve is the sum of all the individual demand curves in a market True

  15. Review • The law of demand states there is an ___________ relationship between the price of a good or service and the quantity buyers purchase. Inverse

  16. Review • Quantity demanded is the __________ of goods and services purchased at a given price. Amount

  17. HOMEWORK • Demand Homework #1 • Plot and label the demand curve • Fill in the blanks, or choose the appropriate answer provided

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