Download Demand Notes

Page 1
Demand Notes
I. What is Demand? (PPT notes)
Demand- the ____________________ to buy a good or service and the ___________ to _______ for it.
Law of Demand- As prices
As prices
quantity demanded goes __________
quantity demanded goes __________
Demand Schedule - a _________ that shows how much of a good or service an ____________ consumer
is willing and able to purchase at _________________ in a market.

*Quantity demanded and price have an _______________, or opposite relationship.
Demand Curve- a __________ that displays the data from an individual demand _____________

How many DVDs will Cheryl buy when the price is $10?
Market Demand Schedule- shows how much ____________________________
are willing and able to buy at each price in a market.
Market Demand Curve- shows the data found on _______________________________________.
(Shows the quantity that all consumers, or the market as a whole, are willing and able to buy at each
price.)
Law of Demand
 As prices fall… quantity goes _______.
As prices increase… quantity demanded goes ________.
 _________ relationship between price and quantity
 Independent variable (__________)  Dependent variable (__________)
 Called the “______ _______” – __________ caused consumer behavior to ______…we buy
more or less because of the change in price
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II. Factors Affecting Demand (Textbook Reading notes, pgs. 97- 98)
2 Types of changes regarding demand (Pg. 97)
1- What is a “change in quantity demanded”?
2- What is a “change in demand?”
Change in Quantity Demanded (pg. 98)

What happened to the quantity (amount) of CDs demanded when the price changed from $15
to $10?

The movement from point a to point b is called what?

When the price goes up, ________ CDs are demanded (fill in the blank)

When the price does down, ________ CDs are demanded (fill in the blank)
Income Effect- When the price of a product drops, ___________________________________________
_____________________________________________________________________________________
 Example from textbook:
- When the price of CDs was $15, how much money did consumers spend altogether
to get 6 CDs? ______
When the price of CDs was changed to $10, how much money did consumers spend
altogether to get 6 CDs? ________
- How much “richer” did the consumers feel because of the drop in price? ________
- If the price had gone up, consumers would have felt a bit “____________” and
would have bought fewer CDs.
Substitution Effect a lower price means CDs will be relatively less expensive than other goods and services such as
________________.
 Consumers would replace a more costly item such as a ____________________, with a less
costly one- ______________
 Substitution effect is defined as ____________________________________________________
______________________________________________________________________________
 Whenever a price change causes a change in quantity demanded, the change appears
graphically as a ___________________________________________________________
Challenge Question #1: Malik goes to the mall to buy a $40 pair of jeans and discovers that they are on
sale for $25. If Malik buys two pairs, is this an example of the income effect or the substitution effect?
____________________________
Continue on next page to complete challenge questions 2-6
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How a Change in Quantity Demanded Works
Challenge Questions 2-6
The graph below shows the demand for Chick-Fil-a Original Chicken Sandwiches.
2. When the price of chicken sandwiches is $2, what quantity (amount) of chicken
sandwiches will be demanded?
3. Due to a shortage of chicken, Chick-Fil-a had to temporary change the price of its
sandwiches to $3. What quantity of chicken sandwiches will now be demanded?
4. When the shortage of chicken increased, Chick-Fil-a had to increase the price even more
to $4 per sandwich. What quantity of chicken sandwiches will now be demanded?
5. What caused the quantity of chicken sandwiches demanded to change?
6. Which description best illustrates the change of quantity demanded in this scenario?
a) This scenario caused the demand curve to shift
b) This scenario caused a movement along the demand curve
$5
$4
Price
$3
$2
$1
20
40
60
80
100
Quantity of Sandwiches Demanded (in millions)
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Change in Demand (use reading handout)
A change in demand occurs when _________________________________________________________
_____________________________________________________________________________________
A change in demand is also called a ____________ in demand because it actually __________ the
position of the demand curve.
CHALLENE QUESTION!!
Figure 4.8 Does this shift to the left indicate in
increase or decrease of demand? (circle one)
Figure 4.8 Does this shift to the right indicate in
increase or decrease of demand? (circle one)
6 Factors that Cause a Change in Demand (Demand Determinants)
Read about the 6 factors that cause a change in demand. Under explanation, write the reasoning the
text provides about how that factor causes demand to change. Under example, briefly summarize the
example the book provides.
Factor
Explanation
Example
Income
Market Size
(or # of buyers)
Consumer Tastes
Consumer
Expectations
(or Price Expectation)
Substitute Goods
Complementary
Goods
Answer challenge questions 1- 9 on next page! 
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Challenge Questions 1-9 (Change in Demand)
In the summer of 2012, Dan Cathy, President of Chick-Fil-a, made a series of controversial comments opposing gay
marriage. As result, millions of people boycotted Chick-fil-A, completely changing the demand for original chicken
sandwiches.
Note that the solid line indicates the demand for chicken sandwiches before Dan Cathy’s statements and the
dashed line indicates the demand after the statements.
1. Before the statement, what quantity was demanded of chicken sandwiches when the price was
$1?
2. After the statement, what quantity was demanded of chicken sandwiches when the price was
$1?
3. Before the statement, what quantity was demanded of chicken sandwiches when the price was
$2?
4. After the statement, what quantity was demanded of chicken sandwiches when the price was
$2?
5. Before the statement, what quantity was demanded of chicken sandwiches when the price was
$3?
6. After the statement, what quantity was demanded of chicken sandwiches when the price was
$3?
7. Of the 6 demand determinants, which caused the demand for chicken sandwiches to change
after Dan Cathy made his statements?
8. Which description best illustrates the change of quantity demanded in this scenario?
a) This scenario caused the demand curve to shift
b) This scenario caused a movement along the demand curve
9. Because the demand curve moved to the left, did overall demand for chicken sandwiches
increase/ decrease? (circle one)
_________________________________________STOP________________________________________
Answer the following questions about the 6 demand determinants.

If number of buyers = Demand will _____________

If consumer income = Demand will _____________

If consumer expectations (expect price the price to increase later) = Demand will _____ now

If consumer taste = Demand will _____________

Regarding substitutes: the price of Cocoa Puffs = Demand for Cocoa Krispies ________

Regarding complements: the price of milk = Demand for cereal ________
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Contrasting Change in Demand with a Change in Quantity Demanded
Change in Quantity Demanded
o
Happens because of ________
o
Shown as a ________________ along the
demand curve
Change in Demand
o Happens because of the _____
___________ ______________
o Shown as a _________ of the
demand curve
1. The price of Oreo cookies has decreased from $3 to $1 due to a nationwide sale by Nabisco.
A) Does the problem mention price? If so, is it discussing the price of the product in question?
B) Is this a change in demand or a change in quantity demanded?
C) If it is a change in demand, which demand determinant caused demand to shift?
D) Draw how demand has been altered on the graph below.
o Remember you are drawing a shift OR a movement along the curve
Demand for Oreos
2. A popular football player (such as Cam Newton) endorses Dannon Yogurt.
A) Does the problem mention price? If so, is it discussing the price of the product in question?
B) Is this a change in demand or a change in quantity demanded?
C) If it is a change in demand, which demand determinant caused demand to shift?
D) Draw how demand has been altered on the graph below.
o Remember you are drawing a shift OR a movement along the curve
Demand for Yogurt
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3. New families move into a newly developed community called Freytown, increasing Freytown’s
population. In turn, this has changed the amount business at the Wild Wing Café in Freytown.
A) Does the problem mention price? If so, is it discussing the price of the product in question?
B) Is this a change in demand or a change in quantity demanded?
C) If it is a change in demand, which demand determinant caused demand to shift?
D) Draw how demand has been altered on the graph below.
o Remember you are drawing a shift OR a movement along the curve
Demand for Wild Wing Cafe
4. The price of Captain Crunch has sharply increased from $2 a box to $4 a box.
A) Does the problem mention price? If so, is it discussing the price of the product in question?
B) Is this a change in demand or a change in quantity demanded?
C) If it is a change in demand, which demand determinant caused demand to shift?
D) Draw how demand has been altered on the graph below.
o Remember you are drawing a shift OR a movement along the curve
Demand for Captain Crunch
5. The price of cream cheese has risen. How has this impacted the demand for bagels?
A) Does the problem mention price? If so, is it discussing the price of the product in question?
B) Is this a change in demand or a change in quantity demanded?
C) If it is a change in demand, which demand determinant caused demand to shift?
D) Draw how demand has been altered on the graph below.
o Remember you are drawing a shift OR a movement along the curve
Demand for Bagels
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6. The price of beef has decreased. How has this impacted the demand for chicken?
A) Does the problem mention price? If so, is it discussing the price of the product in question?
B) Is this a change in demand or a change in quantity demanded?
C) If it is a change in demand, which demand determinant caused demand to shift?
D) Draw how demand has been altered on the graph below.
o Remember you are drawing a shift OR a movement along the curve
Demand for Chicken
7. You received a raise and a job promotion. This in turn, has impacted your demand for designer
clothing.
A) Does the problem mention price? If so, is it discussing the price of the product in question?
B) Is this a change in demand or a change in quantity demanded?
C) If it is a change in demand, which demand determinant caused demand to shift?
D) Draw how demand has been altered on the graph below.
a. Remember you are drawing a shift OR a movement along the curve
Demand for Designer Clothing
8. The weather is going to be sunny for the next few weeks. In turn, this has impacted demand for
umbrellas.
A) Does the problem mention price? If so, is it discussing the price of the product in question?
B) Is this a change in demand or a change in quantity demanded?
C) If it is a change in demand, which demand determinant caused demand to shift?
D) Draw how demand has been altered on the graph below.
a. Remember you are drawing a shift OR a movement along the curve
Demand for Umbrellas
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9. The price of burgers at Wendy’s increased, impacting the demand of burgers at McDonalds.
A) Does the problem mention price? If so, is it discussing the price of the product in question?
B) Is this a change in demand or a change in quantity demanded?
C) If it is a change in demand, which demand determinant caused demand to shift?
D) Draw how demand has been altered on the graph below.
a. Remember you are drawing a shift OR a movement along the curve
Demand for McDonalds
10. The price of movie tickets at AMC decreased, impacted the demand of tickets at Regal Cinemas.
A) Does the problem mention price? If so, is it discussing the price of the product in question?
B) Is this a change in demand or a change in quantity demanded?
C) If it is a change in demand, which demand determinant caused demand to shift?
D) Draw how demand has been altered on the graph below.
a. Remember you are drawing a shift OR a movement along the curve
Demand for Regal Cinemas
11. Kroger has put all bags of Doritos on sale, changing the cost from $3 to $2.
A) Does the problem mention price? If so, is it discussing the price of the product in question?
B) Is this a change in demand or a change in quantity demanded?
C) If it is a change in demand, which demand determinant caused demand to shift?
D) Draw how demand has been altered on the graph below.
a. Remember you are drawing a shift OR a movement along the curve
Demand for Doritos
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V. Elasticity of Demand (PPT notes)

Price elasticity of demand is a measure of the relationship between a change in ____________
and a change in ______________________________

Elastic- quantity demanded changes ____________ as ________ changes
o Ex: Price of _________ increases from $1 to $5
 Demand will change ________ = __________

Inelastic- quantity demanded changes ____________ as ________ changes
o Ex: Price of _____________ increases from $10 to $50
 Demand will change very ___________= ___________

What determines elasticity?
1. Necessity or Luxury
2.
o
Necessities are ____________________ (x-rays)
o
Luxuries are ___________________ (milkshakes)
Substitute goods or services
o
If there is a substitute demand will be _______________

o
Ex: ______________________________________________________________
If there is no substitute demand will be _______________

Ex: ______________________________________________________________