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WARM-UP

WARM-UP. What is demand? What products or things are most “in-demand” to you and why? List 5. Chapter 4: Demand. Section 1: What is Demand?. Main Idea:. Demand is a willingness to buy a product at a particular price. Desire.

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WARM-UP

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  1. WARM-UP What is demand? What products or things are most “in-demand” to you and why? List 5.

  2. Chapter 4:Demand Section 1: What is Demand?

  3. Main Idea: Demand is a willingness to buy a product at a particular price.

  4. Desire • People sometimes think of demand as the desire to have or to own a certain product • In this sense, anyone who would like to own a $10,000 HD 3D TV could be said to “demand” one

  5. Desire is not enough to be counted in the marketplace • Demand—the desire, ability, and willingness to buy a product

  6. Microeconomics – area of economics that deal with behavior and decision making by small units, such as individuals and firms. • Microeconomic concepts help explain: • How prices are determined • How individual economic decisions are made

  7. The Law of Demand • TheLaw of Demand states that the quantity demanded of a good or service varies inversely with its price. • When price goes up, the quantity demanded goes down • When price goes down, the quantity demanded goes up

  8. The Graph Background • X Axis: Always Quantity • Y Axis: Always Price PRICE Y AXIS QUANTITY X AXIS

  9. Demand schedule: listing showing the quantity demanded at all possible prices that might prevail in the market at a given time

  10. Demand curve: graph showing the quantity demanded at each and every possible price that might prevail in the market at any given time

  11. A market demand curve illustrates how the quantity that all interested persons (the market) will demand varies depending on the price of a good or service.

  12. Demand and Marginal Utility • Marginal utility is the extra usefulness or satisfaction a person receives from getting or using one more unit of a product • Diminishing marginal utility: the satisfaction we gain from buying a product lessens as we buy more of the same product.

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