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Law of Demand
 Law of Demand
 People do less of what they want to do as the cost of
doing it rises
 Recall the Cost-Benefit Principle
 Pursue an action if and only if its benefits are at least as
great as its costs
 Recall the Reservation Price
 The highest price we’d be willing to pay
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Total Expenditure
 Total Expenditure equals
 The number of units sold multiplied by the price of the
good
 Total Expenditure = Total Revenue
 The dollar amount that consumers spend on a product is
equal to the dollar amount that sellers receive
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Fig. 5.7
The Demand Curve for Movie Tickets
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