Download Demand curve - Effingham County Schools

Chapter 4.1/4.2 notes
Demand
Demand
•
•
•
•
•
the desire, ability, and willingness to buy a
product
a microeconomic concept
Law of Demand – when price goes up,
quantity demanded goes down and vice
versa.
P = Price
Qd = quantity demanded
•
•
•
demand schedule – listing that shows the
various quantities demanded at each price
Demand curve – a graph showing the
information from a schedule
Market Demand Curve –shows the
quantities demanded by everyone
Catherine’s Demand Schedule and
Demand Curve
Price of
Ice-Cream Cone
$3.00
2.50
1. A decrease
in price ...
2.00
1.50
1.00
0.50
0 1 2 3 4 5 6 7 8 9 10 11 12 Quantity of
Ice-Cream Cones
2. ... increases quantity
of cones demanded.
The Market Demand Curve
When the price is $2.00,
When
themarket
price is $2.00,
The
demand
curve is the
Nicholas
will demand 3
Catherine will demand
4
of thecones.
individual
demand
ice-cream
cones. curves!
ice-cream
Catherine’s Demand
Price of IceCream Cone
+
Nicholas’s Demand
Price of IceCream Cone
2.00
2.00
1.00
1.00
4
8
Quantity of Ice-Cream Cones
The market demand at
horizontal
sum
$2.00 will be 7 ice-cream
=
cones.
Market Demand
Price of IceCream Cone
2.00
1.00
3
5
Quantity of Ice-Cream Cones
When the price is $1.00, When the price is $1.00,
Catherine will demand 8 Nicholas will demand 5
ice-cream cones.
ice-cream cones.
7
13
Quantity of Ice-Cream Cones
The market demand at
$1.00, will be 13 icecream cones.
Chapter 4 vocab
• Please have this done by tomorrow (2/19)
• Go ahead and work on it
• Remember – 100 3x5 cards donation = 2
points on ONE TEST
Change in the Quantity Demanded
•
•
a movement along the demand curve
because of a change in P
The only thing that changes Qd directly
is a change in P!!!
Changes in Quantity Demanded
Price of IceCream
Cones
B
$2.00
A tax on sellers of icecream cones raises the
price of ice-cream
cones and results in a
movement along the
demand curve.
A
1.00
D
0
4
8
Quantity of Ice-Cream Cones
Change in Demand
•
•
•
the entire demand curve shifts
Increase in D = shift right
Decrease in D = shift left
Figure 3 Shifts in the Demand Curve
Price of
Ice-Cream
Cone
Increase
in demand
Decrease
in demand
Demand
curve, D2
Demand
curve, D1
Demand curve, D3
0
Quantity of
Ice-Cream Cones
Reasons D curve shifts
•
•
•
•
Consumer Income – if incomes go up, D
increases
Consumer Tastes – development of new
products, people get tired of a product, etc.
Change in Expectations – way people
think about the future; Ex: buy more now
if you think P will go up later
Number of Consumers: more =
Increase in D; less = Decrease in D
•
Substitutes – can be used in place of other
products; If P of 1 goes up, D of 2 up
Ex: margarine and butter
•
Complements – related goods; the use of
one good increases the use of the other.
If P of 1 goes up, D of 2 goes down
Ex: hot dogs, hot dog buns
Normal vs. Inferior Goods
• Normal good – goods that consumers
demand more of when their incomes rise.
• Ex: steak
• Inferior good – goods that consumers
demand less of when their incomes rise.
• Ex: Ramen noodles