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Objective—Students will understand the concept of DEMAND in economics and the idea of the LAW OF DEMAND and be able to plot a basic DEMAND CURVE. DEMAND: • The quantities of a product which consumers are willing to purchase at various prices. Please note… • If you add the words “…and able…” between “…willing…” and “…to buy…”, so that it reads…”…Willing and able to buy…”, now you have something called • Effective Demand. • (I might be willing to buy a certain car, but…am I able?) LAW OF DEMAND: • As the price of the product (P) goes down, the quantity (Q) of the product which consumers are willing to purchase goes up, and vice versa. Or..as a memory aid… • http://www.youtube.com/watch?v=I_izvAb hExY&ob=av2e • OR..in symbols.. Q^ P ^ Q v, P v • This shows an inverse relationship of P to Q. • If the price changes, the law of demand says that the quantity will change. This is known as the Price Effect. It is NOT a change in demand to have the quantity change when the price changes, it is merely a movement along the curve. Let’s try an experiment • Assuming you are a “normal” group of “consumers”…if you are asked what you would be willing to pay for a normal consumer item, you might respond with data… • …and the data could be placed on a “Demand Schedule”… P I Q • Objective—Students will understand the concept of DEMAND in economics and the idea of the LAW OF DEMAND and be able to plot a basic DEMAND CURVE.