Supply and Demand • https://www.youtube.com/watch?v=g9aDizJpd_s
Definition of Demand • The desire to have some good or service and the ability to pay for it.
Law of Demand • States that when prices go down, quantity demanded increases. When prices go up, quantity demanded decreases.
*Demand Schedule vs. Market Demand Schedule • Demand Schedule- a listing of how much of an item an individual is willing to purchase at each price. • Market Demand Schedule- a listing of how much of an item all consumers are willing to purchase at each price.
Law of Diminishing Marginal Utility • States that the marginal benefit of using each additional unit of a product during a given period will decline. • Ex: Glasses of lemonade on a hot day.
*Substitution effect • The pattern of behavior that occurs when consumers react to a change in the price of a good or service by buying a substitute product- one whose price has not changed and that offers a better relative value. • Example: Paperback books and magazines.
Elasticity of Demand • Elasticity of demand is the measurement of how responsive consumers are to price changes. • Elastic- if the quantity demanded changes significantly • Inelastic- if the quantity demanded changes little
Inferior Goods vs. Normal Goods • Inferior Goods are goods that consumers demand less of when their incomes rise. • Ex: Discount clothing, used books, and generic food products. • Normal Goods are goods that consumers demand more of when their incomes rise.
What causes demand change? • Income- increased income means consumers can buy more. • Market Size- A growing market usually increases demand. • Consumer Tastes- The popularity of a good or service has a strong effect on the demand for it. • Consumer Expectations- What you expect prices to do in the future can influence your buying habits today.
Substitutes &Complements • Substitutes are goods and services that can be used in place of each other. • Hardback books vs. Paperback books • Complements are goods that are used together, so a rise in demand for one increases the demand for the other. • CDs and CD players
*What causes a change in Demand? • Complements- when the use of one product increases the use of another product. • Substitutes- Goods and services that can be used instead of other goods and services.
Crash Course 1/2 • https://www.youtube.com/watch?v=LwLh6ax0zTE
Demand Activity • Partner Up! • Turn to page 113
Demand Activity Instructions • Each group of students will have 2 factorsthat cause a change in demand. • Groups will brainstorm scenarios that show how their factors affect the demand for their product(s). Groups can illustrate their ideas in a form such as pictures, cartoons, or diagrams. • Be sure to provide text that explains what you drew and why you chose to draw it.