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Transcript
Factors Affecting Demand
1-What is a “change in the quantity demanded”?
• The movement along the demand curve showing that the
amount someone is willing to purchase changes when the
price changes.
2-Explain the “Income Effect”
• That part of a change in quantity demanded due to a
change in the buyer’s real income when a price
changes.
3-What happens when prices drop?
• Consumers pay less and have extra income to spend on other
items. It makes them feel “richer”
https://www.youtube.com/playlist?list=PLzKW_jwqxXrycKa6Fz
oAzkrW4vA0LiNWj
4-How can an increase in price affect demand?
• Consumers feel poorer and buy less of an item.
5-The Substitution Effect
• That part of a change in quantity demanded due to a price change that
makes other products less costly.
• Causes consumers to buy less of a good whose price has increased and more of a similar
good whose price has decreased.
• Similar Products:
•A rise in the price of Coke causes consumers to buy Pepsi
•A rise in the price of movie tickets causes consumers to buy fewer tickets and download
more movies.
•A rise in the price of gas causes consumers to switch from driving a car to taking a bus or
train.
•A rise in the price of coffee may cause some to switch to tea.
6-What is a “change in demand”?
• A shift of the demand curve caused buy certain factors
other than price.
• An increase in demand shifts the curve to the right.
• A decrease in demand shifts the curve to the left.
Shifts in the Demand Curve
Change in the quantity demanded
Change in demand
Change in the Quantity Demanded
When you move along the demand curve, the change in quantity that
people wish to buy an item changes as the price increases or decreases
Change in Demand
The entire demand curve shifts as more people wish to buy a certain
product. This shift is caused a change in any influence on customer’s
buying behavior other than price. Consumers want more or less of the
same good at every price.
5 Determinants [or “shifters”] of Demand
These cause the demand curve to shift right [increase in demand]
or shift left [decrease in demand]
1. Consumer Income
2. Consumer Tastes
3. Price of Related Goods [substitutes and complements]
4. Expectations
5. Number of Consumers
7-Consumer Income
• a-What happens if consumer income rises? Falls?
• Rises: Curve Shifts to the Right [increase in demand]
• Falls: Curve Shifts to the Left [decrease in demand]
Consumer Tastes
• b-What factors affect consumer tastes?
• Advertising: Fashion; Trends/Fads
• Popular: Shifts to the Right
• Unpopular: Left
Substitutes
c-What happens to the demand of a product is the price of its
“substitute” goes up?
• [Coke/Pepsi; hamburgers/hotdogs]
• Demand increases for the substitute and curve shifts to the
Right
7-Complements
d- How does an increase in a product’s price affect demand for the
products “complement”?
[milk and cereal; peanut butter and jelly; hot dogs and mustard; iphones
and earbuds]
• Decreases demand for the product and curve shifts left
Expectations
1-What happens to the demand for a product if consumers think the
product will be better in the future?
• Demand curve shifts left
2-What happens to the for a product if consumers think there will be a
shortage on the future?
• Demand curve shifts right
Number of Consumers
1-What happens to the market demand curve if there is an increase in
the number of consumers?
• Demand curve shifts Right
2-What happens to the market demand curve whenever anyone leaves
the market?
• Demand curve shifts Left
Is it a CHANGE in DEMAND or in the QUANTITY DEMANDED?
1-Holly gets a raise at work and decides that she will by more music downloads.
2-David notices that the price of coffee has increased, so he buys less coffee.
3-George decides not to buy new tires now since he expects tire prices to fall next month.
4-Eric notices that the prices of Coke is higher and as a result buys more Pepsi.
5-As the population ages, more people buy hearing aids.
6-James decides to buy more peanut butter as a result of jelly going on sale.
7-Madeline does not need to buy diapers anymore for her three-year-old son.
CHANGE in DEMAND or in the QUANTITY DEMANDED
1-Holly gets a raise at work and decides that she will by more music downloads.
DEMAND: Income rises
2-David notices that the price of coffee has increased, so he buys less coffee.
QUANTITY DEMANDED: The price rises, Income Effect
3-George decides not to buy new tires now since he expects tire prices to fall next month.
DEMAND: Expectation of future price decrease.
4-Eric notices that the prices of Coke is higher and as a result buys more Pepsi.
DEMAND: Substitution Effect
CHANGE in DEMAND or in the QUANTITY DEMANDED
5-As the population ages, more people buy hearing aids.
DEMAND: Size of hearing aid market increases.
6-James decides to buy more peanut butter as a result of jelly going on sale.
DEMAND: Price of a complement decreases
7-Madeline does not need to buy diapers anymore for her three-year-old son.
DEMAND: Size of diaper market decreases
FADS and DEMAND
https://www.youtube.com/watch?v=upIMfHFgWtQ
FADS
Bratz
Silly Bandz
iPods
Crocs
Rainbow Loom
FADS
Hacky-Sack
Pet Rocks
Sea monkeys
Frisbee
Fads and Demand
With your partner, create your own fad or select an actual fad. On your poster,
draw your best representation of that fad and then go through how it affects
demand. Include all of the information below.
1-Draw a picture of your fad.
2-Create a demand schedule for your fad.
3-Create a demand curve for your product based on the demand schedule. Include the
points for quantity demanded.
4-On your demand curve, add one of the determinants of demand and the direction
your demand curve will shift: (income, tastes, substitutes, complements, expectations,
number of consumers)
5-List 1 substitute and 1 complement for your fad
6-Create the demand curve shifts for 1 substitute and 1 complement.