Download Demand - Flushing Community Schools

What Is Demand?
 What makes you want to buy a product?
 Popularity of the product, consumer tastes, trends, price of
product.
 What encourages consumers to buy more of a
product?

LOWER PRICES!
 Demand Curve:

Graph showing the quantity
demanded at each and every
possible price that might prevail
in the market at a given time.
 Demand Schedule

Shows various quantities
demanded of a particular
product at all prices that might
prevail in the market at a given
time.
Demand
 How does price
affect the number
of DVDs people are
willing to buy?

The higher the price, the
fewer DVDs people are
willing to buy
What is the relationship between the price of an
item and the quantity demanded?
 Main Ideas of Demand:
 Demand depends on two variables: the price of a product and
the quantity available at a given point in time.
 In general, when the price of a product goes down, people are
willing to buy, or demand, more of it. When the price goes up,
they are willing to buy less.
 A demand curve shows the quantity of a product demanded
at each price that might prevail in the market.
 The Price of Burritos
 What happens to quantity demanded when
the price increases?

Quantity demanded decreases when the price increases
 What happens when the price decreases?
 Quantity demanded increases when the price decreases
REMEMBER!!!
 Demand is the desire, ability, and willingness to
buy a product; all of these tend to increase as the
price decreases. With few exceptions, desire and
ability or willingness to buy a product decrease if
the price increases
Law Of Demand
 Why do economists think of demand as a
“law”?
 The Law of Demand states that the quantity
demanded of a product varies inversely with its
price.
 The Law of Demand is called a “law” because it has
proven true after repeated studies and tests, and it is
consistent with common sense and observation.
 A market demand curve shows the quantities of a
product demanded by everyone who is interested in
purchasing it at all possible prices.
Individual Demand Curve
 If both of the individual curves slope down,
what should the market curve do?
Market Demand Curves
 A: The market curve will also slope down, because it
is an average of the data used to create the two
individual curves.
 How does the market demand curve reflect
the Law of Demand?

The market demand curve shows the quantities demanded by
everyone who might want to purchase a product. It shows
how the Law of Demand works in relation to prices and
quantity purchased.
Activity
 How many cans of soda would you buy at…
 $.25
 $.50
 $.75
 $1.00
 What effect do changes in price have on the
quantity demanded for soft drinks?
Demand and Marginal Utility
 How does the principle of diminishing
marginal utility explain the price we would
be willing to pay for another unit of a good
or service?



Marginal utility is the extra satisfaction or additional
usefulness obtained by acquiring multiple units of a product.
As we use more and more of a product, the extra satisfaction
we get from using additional quantities begins to decline; this
is known as diminishing marginal utility.
Because of diminishing marginal utility, people are not
usually willing to pay as much for the second, third, or fourth
unit as they did for the first unit.
 So… How does the principle of diminishing
marginal utility explain the price we pay for
another unit of a good or service?

As we consume more and more of something, we get less
additional satisfaction out of each additional amount we
consume. Getting less satisfaction decreases our willingness
to pay as much for another unit.
 What problems might economists have in
trying to measure marginal utility?

Marginal utility is difficult to measure because it is subjective.
If 20 people were asked how much satisfaction they received
from a second soft drink, for example, each one might give a
different answer.
 Write a reflection paragraph describing two different
decisions they made regarding purchases: one
decision to buy a product, and one decision not to
buy a product. Have them explain what affected their
decisions: price, need, utility, or other factors.