1 / 13

Chapter 4

Demand http://www.youtube.com/watch?v=uXlZIn6W7Ew&feature=plcp&context=C3002983UDOEgsToPDskKifYAN0KR-NWdn4R4N1jGP. Chapter 4. Demand. The desire, ability, and willingness to buy a product Demand Schedule- shows the amount demanded at every price. Demand Curve.

thiery
Download Presentation

Chapter 4

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Demandhttp://www.youtube.com/watch?v=uXlZIn6W7Ew&feature=plcp&context=C3002983UDOEgsToPDskKifYAN0KR-NWdn4R4N1jGPDemandhttp://www.youtube.com/watch?v=uXlZIn6W7Ew&feature=plcp&context=C3002983UDOEgsToPDskKifYAN0KR-NWdn4R4N1jGP Chapter 4

  2. Demand • The desire, ability, and willingness to buy a product • Demand Schedule- shows the amount demanded at every price

  3. Demand Curve • Tells the quantity that consumers will demand at each and every price.

  4. Law of Demand • Demand is higher at lower prices and lower at higher prices • Inverse

  5. Marginal Utility • Satisfaction or usefulness obtained from acquiring one more unit of a product • http://www.youtube.com/watch?v=4nC9ioNqizY&feature=related • Ex: Lemonade on a hot day • What happens when you drink too much lemonade?

  6. Diminishing Marginal Utility • Decreasing satisfaction or usefulness as additional units of a product are acquired • More units bought = less eager to buy • Ex: Arby’s 5 for $5 = 1st (delicious), 2nd (good/ok), 3 ( stomach hurts), 4&5 (trash/microwave later/nasty)

  7. Change in quantity demanded Affected by price (all other variables fixed) Visually (graph), shows move along same curve (up or down) http://www.youtube.com/watch?v=aTSwcXJ700c&feature=related Change in Demand People buy different amount at the same price (other variables than price involved) Visually, shows moving from one curve on a graph to another (left to right) Change in Quantity Demand vs. Change in Demand

  8. Determinants of Change in Quantity demanded • Income effect: when the price of a good comes down/up, as though your income went up/down, therefore you buy more/less • Substitute effect: when the price of a good goes down/up, you get more/less in this category, therefore making up for stable or higher prices in other categories

  9. Change in demand Determinants Demand is also affected by non-price factors • Consumer incomes • Consumer tastes and preferences • Prices of related goods (sub. & comp.) • Change in expectations • Change in number of consumers

  10. Substitutes: Competing products that can be used in place of one another An increase in the price of one increases the demand for the other Ex: Butter and Margarine Complements: Products that increase the value of other products An increase in the price of one reduces the demand for both An increase in the use of one will increase the use of the other Ex: film and camera Prices of related goodsSubstitutes and Complements

  11. Elastic or Inelastic? Because some goods and services are affected by price more than others, we classify demand as either elastic or inelastic. http://www.youtube.com/watch?v=VFiv_rLhIjs&feature=related

  12. Elastic Small price changes can make big changes in demand Amount bought will go up when price goes down You can wait to buy Inelastic Price changes don’t affect demand Lower price will NOT affect the amount bought You can’t wait to buy Elastic or Inelastic?

  13. How is elasticity determined? • Can the purchase be delayed? • Yes = elastic • No = inelastic • Are adequate substitutes available? • Yes = elastic • No = inelastic • Does the purchase use a large portion of your income? • Yes = elastic (Ex: car) • No = inelastic (Ex: salt)

More Related