WARM-UP What is demand? What products or things are most “in- demand” to you and why? List 5.

Chapter 4: Demand Section 1: What is Demand?

Main Idea: Demand is a willingness to buy a product at a particular price.

Desire People sometimes think of demand as the desire to have or to own a certain product In this sense, anyone who would like to own a $10,000 HD 3D TV could be said to “demand” one

Desire is not enough to be counted in the marketplace Demand—the desire, ability, and willingness to buy a product

Microeconomics – area of economics that deal with behavior and decision making by small units, such as individuals and firms. Microeconomic concepts help explain: 1.How prices are determined 2.How individual economic decisions are made

The Law of Demand The Law of Demand states that the quantity demanded of a good or service varies inversely with its price. When price goes up, the quantity demanded goes down When price goes down, the quantity demanded goes up

The Graph Background X Axis: Always Quantity Y Axis: Always Price PRICE Y AXIS QUANTITY X AXIS

Demand schedule: listing showing the quantity demanded at all possible prices that might prevail in the market at a given time

Demand curve: graph showing the quantity demanded at each and every possible price that might prevail in the market at any given time

A market demand curve illustrates how the quantity that all interested persons (the market) will demand varies depending on the price of a good or service.

Demand and Marginal Utility Marginal utility is the extra usefulness or satisfaction a person receives from getting or using one more unit of a product Diminishing marginal utility: the satisfaction we gain from buying a product lessens as we buy more of the same product.