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Do the vocab on the assignment in google
Who’s Hungry?
What’s your favorite
Valentine’s Day candy?
What is Demand?

Defined


The desire to have
some good or service
and the ability to pay
for it
Generally:
When prices go down,
amount demand goes up
 When prices go up,
amount demanded goes
down
 This concept is called the
Law of Demand

The Law of Demand
As prices
go up…
Quantity
demanded
goes
down
As prices
go
down…
Quantity
demanded
goes Up
What are Demand
Schedules & Curves?

Defined




A table or a graph that shows how
much of a good or service a consumer
is willing to purchase at a certain price
Can be used for a single consumer or
for an entire market
Information is gathered and placed on
a schedule. From the information on
the schedule, a curve is created
Why use schedules and curves?


Clearly shows how much people will
buy of a product
Important for producers to know how
much to make of a certain item or
product
Creating a Demand
Schedule and curve


You have found the BEST pizza place in the world
How many of you would be willing to purchase a pizza at the
following prices?
$50
$40
$30
$20
$10
$5
What Affects Demand?

Law of Diminishing Marginal Utility

Defined:


Examples:



Cup of coffee in the morning
Producers realize that consumers receive less satisfaction from each
additional purchase, so the price for their good must match this level of
satisfaction
Income Effect

Defined:


Benefit of using an item or good will decrease with each additional use of
the item or good
The change in the amount that consumers will buy because the purchasing
power of their income changes
Substitution Effect

Defined:

When people react to a price increase by purchasing a substitute product
What Affects Demand?

Changes in Demand


A change in the marketplace that causes consumers to buy
different amounts of goods or services at every price
There are six factors that affect demand
Change in Demand

Factor #1: Income


A person’s ability to buy
goods changes as his or her
income changes
As incomes of most
consumers in a market
change, so does total
demand

Normal goods


Goods that are demanded more
when consumers’ incomes rise
Inferior goods

Goods that are demanded less
when consumers’ incomes rise
Change in Demand

Factor #2: Market Size


As number of consumers
in an area changes, so
does market size
Demand for most goods
changes as market size
changes
Increase in population
leads to increased
demand
 Decrease in population
leads to decreased
demand

Change in Demand:
Market Size
Change in Demand

Factor #3: Consumer
Tastes



Consumer tastes
change; products gain
and lose popularity
Consumers demand a
greater amount of
popular items at every
price
Sellers advertise to
create demand for
products
Change in Demand

Factor #4: Consumer
Expectations

Expectations about future
price of items affect individual
behavior


expected rise or fall in price can
decide whether to buy now or
wait
Expectations of all consumers
in a market affect demand

Example: because cars go on
sale at end of summer, demand
goes up then
Change in Demand

Factor #5: Substitutes

Defined: Products that are used in place of
each other
If the price of a substitute drops, people buy it
instead of original item
 If price of original item rises, people will buy the
substitute

Change in Demand

Factor #6: Complements

Defined:
Goods that are used together
 Example: Peanut butter & jelly



If rise in demand for one
increases, then there will be
a rise in demand for the
other
If price of one product
changes, demand for both
changes in same way

If price of one rises, demand
for both will drop
Charting Changes in
Demand
Six Factors that
Change demand



1) Income
 4) Consumer Expectations
2) Market Size
 5) Substitute Goods
3) Consumer Tastes  6) Complementary Goods

Your Task:




Find a partner
Review your assigned factor that changes
demand (Pgs. 86-88)
Define and describe your term
Find a headline/video/news clip that
demonstrates this type of change in demand