Download demand notes class

Demand
Demand
• The amount of a good or service that a consumer
is willing and able to buy at various possible
prices during a given time period.
The graph can be any
shape/curve, as long
as it is pointing down!
$
# of Goods/Services
Quantity Demanded
• The amount of a good or service that a consumer is
willing and able to buy at each particular price during
a given time period.
At $100 dollars per iPod, the
quantity demanded is 22.
Price
Of
iPods
$100
22
# of iPods
Law of Demand
• An increase in a good’s price causes a decrease in the
quantity demanded.
• A decrease in a good’s price causes an increase in
the quantity demanded.
• EXAMPLE:
– You want to buy an iPod. If it is cheap, do you have a high
demand or low demand for it? If the price goes up, does your
demand increase or decrease?
P =D
, P =D
Demand for Twix
$2.00
Think about
how you react
to price
changes…
D -2
$1.50
D -1
$1.00
$.50
5
10
15
20
Quantity Demanded
At $1.00 per candy bar, about 16 Twix are
If the price of Twix increases to $1.50 per
demanded by students in this class.
candy bar, the quantity demanded will
DECREASE to ?????
Diminishing Marginal Utility
• As more units of a product are consumed, the
satisfaction received from consuming each
additional units declines.