Download demand S. 1

Chapter 4 Objectives
Section 1: What Is Demand?
•Describe and illustrate the concept of __________.
•Explain how ___________ and __________ are related.
Introduction
•Only those people with ___________–the desire, ability, and willingness to buy a product–can
compete with others who have similar demands.
•Demand is a __________________ concept.
•Microeconomics is the area of economics that deals with ____________ and decision making by
small units, such as individuals and firms.
•Collectively, these ____________ of microeconomics help explain how _________ are determined
and how individual _____________ decisions are made.
An Introduction to Demand
•In a __________ economy people and firms act in their own best ___________ to answer the
WHAT, HOW, and FOR WHOM questions.
•Knowledge of demand is important for sound business _____________.
Demand Illustrated
•To illustrate how demand affects business ____________, imagine you are opening a ________.
•Before you begin, you need to know ________ the demand is.
•How do you measure the demand for your ____________?
–You may visit other shops and gauge the reactions of consumers to different prices.
–You may poll ____________ about prices and determine demand from this data.
–You could study data compiled over past years, which would show consumer reactions to higher
and lower prices.
•All of these methods would give you a general idea as to the desire, willingness, and ability of people
to ______.
The Individual Demand Schedule
•A demand ____________ is a listing that shows the various
____________ demanded of a particular product at all prices
that might prevail in the __________ at a given time.
The Individual Demand Curve
 The information found in a demand schedule can also be
shown graphically as a _____________-sloping line on a graph.
 Transfer the price-quantity observations in the demand
schedule to the __________, and then connect the points to form
the ___________.
•Economists call this the demand _______, a graph showing the
quantity demanded at each and every __________ that might prevail in
the ___________.
The
Demand
for
Compact
Discs
The Law of Demand
•The ______ of Demand states that the quantity demanded of a good or service varies inversely with
its price.
–When the ________ goes up, quantity demanded goes down.
–When the price goes down, ___________ demanded goes up.
Foundations for the Law of Demand
•Price is an _____________, which discourages consumers from buying.
•The higher this obstacle, the less of a ___________ they will buy; the lower the obstacle, the more
they will buy.
•Common __________ and simple observation are consistent with the Law of Demand.
The Market Demand Curve
•A ____________ demand curve shows the quantities demanded by everyone who is interested in
purchasing the product.
•To get the market demand curve we add ______________ the number of items that everyone would
purchase at every possible price, and then plot them on a separate graph.
•The only real difference between the individual demand curve and the market demand curve is that
the market demand curve shows the demand for __________ that is interested in buying the product.
Individual and Market
Demand Curves