Download Demand

Why are tickets
to the Super
Bowl more
expensive than
tickets to a
Chavez game?
VOCABULARY:
Demand: The desire to own something and the
ability to pay for it.
Law of Demand: As the price of a good
increases, quantity demanded decreases (and
vice versa) (DO NOT SAY DEMAND DECREASES)
In other words: when price goes up, we buy
less…when price goes down, we buy more

1. The Substitution Effect.
occurs when consumers react to an increase in a
good’s price by consuming less of that good…
and more of other goods that satisfy the same
basic need.
OR
Substitutes: Goods that are used in place of one
another.
When the price of one goes up, the demand for
the other goes up (and Vice Versa)
Compliments: Goods that are bought and used
together.
When the price of one goes up, the demand for
the other goes down.

The Law of Demand says that
as price goes up, quantity
demanded ____ _____.
IF I’m planning a barbecue and the price of hot
dogs doubles, my decision to buy hamburgers
instead is an illustration of the ________
effect.


Individual Demand Schedule: a table that
lists the quantity of a good that a person will
purchase at each price in the market.
Market Demand Schedule: a table that lists
the quantity of a good all consumers in a
market will buy at each different price.
It is used by CEO’s and company executives to
help them to determine how they should
price their product.
1. If the price of tortilla chips increases, what will happen
to the demand for salsa?
2. If the price of Coke increases, what will happen to the
demand for Pepsi?
3. If two goods are substitutes, what will happen to the
demand for Product A if the price of Product B
decreases?
4. If two goods are complements, what will happen to the
demand for Product A if the price of Product B
decreases?
5. What is the Law of Demand?
In your notebook, write
down the Individual and
Market Demand
Schedules on the board to
your right.
What is a demand curve?
It’s just a graphical representation of a
demand schedule!

Horizontal axis shows quantity

Vertical axis shows price

Let’s talk about horizontal, vertical,
and quantity.
-COPY DEMAND CURVE ON BOARD


Vocab:
Change in Quantity Demanded: a movement
along the demand curve caused by a change
in ONLY price.
1. What is the change in quantity demanded if
price changes from $2.50 to $2.00?
2. What is the change in quantity demanded if
price changes from $2.00 to $1.00?
3. What is the change in quantity demanded if
price changes from $0.50 to $2.00?


Vocab:
Change in Demand: A
shift in the demand
curve due to factors
other than price.
Basically it shows that
demand has changed at
all different price
levels.
Factors that cause a Change in Demand (Shift
of the Demand Curve):
1. Income
(if we make more $, we will demand more
of a good at any price. The opposite is also
true!).
2. Consumer expectations
(If we expect prices to rise in the future,
we’ll be more likely to spend more $ now.
If we expect a sale, we will be less likely to
spend more now).

3. Consumer tastes and advertising
(Think about it…why do companies use celebrities to
promote their products?).
4. Population
(If population goes up…so does demand.
Think baby boomer gen.).
5. Prices of related goods (substitutes and
compliments). (If the price of tortilla chips
increases, what will happen to the demand for
salsa?).
Increase in Demand is a right shift:
Decrease in Demand is a Left Shift.