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Factors that affect Demand

Warm Up: Explain in your own words, in your Notebook: 1.Give one example of an elastic product and one example of an inelastic product. 2.What is the variable that affects the quantity we demand of a product?. Factors that affect Demand. (1) CONSUMER TASTE & PREFERENCES :

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Factors that affect Demand

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  1. Warm Up:Explain in your own words, in your Notebook:1.Give one example of an elastic product and one example of an inelastic product. 2.What is the variable that affects the quantity we demand of a product?

  2. Factors that affect Demand (1) CONSUMER TASTE & PREFERENCES: • Trends, fads, & advertising cause us to change our demand for a product. • Jif has a successful advertising campaign, demand has _____________, curve shifts ____________. • The Manning Brothers endorse Oreo Cookies; the demand for Oreos will _______________, curve shifts _______. INCREASED RIGHT INCREASE RIGHT

  3. Factors that affect Demand (2) SUBSTITUTES: • The price of products that REPLACE one another can have an affect on the other’s demand • As JIF pb gets more expensive, the demand for Peter Pan pb will _____________, and the curve shifts ______________. • Since Butter is linked to an unhealthy diet, the demand for margarine will _____________, and the curve shifts _____________. INCREASE RIGHT INCREASE RIGHT

  4. Factors that affect Demand (3) COMPLEMENTS • Demand for products that GO TOGETHER can be affected if its CORRESPONDING product is changed. • When peanut butter prices increase, the demand for jelly will _____________, curve shifts ______________. • As razor blade handles go on sale, the demand for razor blades will ______________, curve shifts ____________. DECREASE LEFT INCREASE RIGHT

  5. Factors that affect Demand (4) CHANGES IN EXPECTATIONS • The FUTURE PRICE or AVAILABILITYof a good affects our demand for the product today. • Peanut crop harvest affected by grasshoppers this season, demand will ______________, curve shifts _____________. • Harry Potter video, blu-ray, dvd’s shelf life will be ended by December 29th demand will _______________, curve shifts ___________. INCREASE RIGHT RIGHT INCREASE

  6. Factors that affect Demand (5) CONSUMER INCOME: • Changes in HOW MUCH MONEY a person has to SPEND can affect demand for a product • Ex) Raise = Increase demand shift right Layoff = Decrease demand shift left • (6) NUMBER OF CONSUMERS: • A change in the SUM of ALL CONSUMERS(Market Demand) will shift the demand curve. Ex. Population increase= shift right More kids with allergies to Peanuts demand for PB DECREASE=shift left

  7. Warm Up:What are the six factors that affect demand and give an example of one

  8. DEMAND SHIFT RULES • When demand for a product INCREASES, the entire curve shifts ______________. • When demand for a product DECREASES, the entire curve shifts _______________. RIGHT LEFT

  9. Demand Scenarios • For each of the following scenarios you will have to explain what will happen to demand and also illustrate a graph that shows what happened to demand. • All graphs will start like this and you will have to: • Read scenario and identify either an increase or decrease. • Determine which reason caused the change. • Write a sentence explaining and show a new demand curve. Price D Quantity

  10. Scenario • To share even more profits, McDonalds reduces the price of its dollar menu to a 50 cent menu. How will this affect the demand of Burger King’s food? • Read scenario and identify either an increase or decrease. • Determine which reason caused the change. • Write a sentence explaining and show a new demand curve. Price Demand for ____________ will ______________ due to ________________; therefore the curve will shift _______________. Burger King DECREASE Substitutes LEFT D1 D Quantity

  11. Scenario • More and more Americans are losing money in the stock market. How will this affect their over all demand for goods and services? • Read scenario and identify either an increase or decrease. • Determine which reason caused the change. • Write a sentence explaining and show a new demand curve. Price Demand for GOODS & Serviceswill ______________ due to ________________; therefore the curve will shift _______________. DECREASE Cons. Income LEFT D1 D Quantity

  12. Scenario • Derek Jeter successfully endorses GM cars, what should happen to demand for GM cars? Explain. • Read scenario and identify either an increase or decrease. • Determine which reason caused the change. • Write a sentence explaining and show a new demand curve. Price Demand ________________ will ______________ due to ________________; therefore the curve will shift _______________. GM CARS INCREASE Cons. Tastes RIGHT D1 D Quantity

  13. Scenarios • PRACTICE MAKES PERFECT!

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