Turtle I.R.D.L

What does his name mean? I- Increase R- Right D- Decrease L- Left

Did YOU Know?!?  Billy goats urinate on their own heads to smell more attractive to females.  Following Thanksgiving, Super Bowl Sunday is the largest food consumption day in the United States.  There is a town in Texas called ‘Ding Dong’.

Unit IV: Microeconomics Lesson One

What is Demand?  Demand: The desire to own something and the ability to pay for it  Demand is different than desire  You must have a want for the good/service and you must be able to pay for it!!!

Price per Slice of Pizza # of Customers $2.00 $4.00 $6.00 $10.00

Law of Demand  Law of demand: Consumers will buy more of a good when the price of a good or service decreases and less when its price increases  Producers are aware of this law and know if their prices rise too high, consumers will stop buying their good

Demand Schedule  The demand schedule is a table that lists the quantity of a good a person will purchase at various prices  A market demand schedule is a table that lists the quantity of a good all consumers in the market will buy at each different price

Demand Schedule Individual Demand Schedule Price of Slice of PizzaQuantity Demanded per Day $1.005 $2.004 $3.003 $4.002 $5.001 $6.000

Market Demand Schedule Price of Slice of PizzaQuantity Demanded per Day $ $ $ $ $ $6.0050

Demand Curve  When you take a demand schedule or a market demand schedule and graph it you get a demand curve It is always negatively sloped  All demand schedules and curves show the law of demand

Demand Schedule

Market Demand Schedule

Market Demand

Changes in Demand  When there is a change in demand itself we get a new demand schedule and curve  Symbol: (  D)  The numbers in the demand schedule will change and the entire curve will shift

 If there is an increase in demand (D) the demand curve will shift to the RIGHT.  For each price on the demand schedule, the quantities increase Changes in Demand

 If there is a decrease in demand the demand curve will shift to the LEFT.  For each price on the demand schedule, the quantities decrease. Changes in Demand

Change in Quantity Demanded  A change in quantity demanded caused ONLY by a change in the PRICE of the product.  On a graph it is represented by a movement ALONG a SINGLE demand curve.  Symbol: (  Qd)

Change in Quantity Demanded (  Qd)

Very Important!!!  Change in demand (  D) Shift of Curve Not the result of a change in price  Change in quantity demanded (  Qd) Slide along the curve Results from a change in price

Demand Factors  In real life, market conditions often change  When you assume that nothing besides the price of a good would change this is called ceteris paribus A Latin phrase that means “all other things held constant”

Demand Factors  Demand is affected by more than price  Non-price determinants: Factors, other than price, that affect (shift) the quantity demanded at a given price  There are seven non-price determinants of demand

Tastes and Preferences  Goods and services that people want are constantly changing, therefore constantly affecting demand  Firms hope that their advertising will make you want their product

Income  People’s income will affect their demand  Normal goods are goods that people demand more of when income increases People may begin to buy name brands over store brands  Inferior goods are goods for which there is less demand when income increases People may begin to buy more new cars rather than used cars

Substitute Items  Substitutes are goods used in place of another  If the price of a substitute item increases, demand for the other product will increase  If the price of a substitute item decreases, demand for that product will decrease

Complimentary Items  Complements are two goods that are bought and used together  If the price of a complementary item for a product increases, demand will decrease.  If the price of a complementary item for a product decreases, demand will increase

Expectations  Expectations of what the future price of a good will be will affect demand  Demand will decrease if customers expect the price to drop soon. Demand will increase if customers expect the price of a good to rise soon

Population  If the population of an area increases it will affect the demand for many goods and services  Example: When the population of a town increases the demand for schools, homes, water, and power will all increase

Demographics  The age, race, gender, and occupation of a group of people will affect demand  Businesses will use this information to identify markets for their products  Example: If the population is younger they may have an increased demand for smartphones as compared to older consumers

Demand Shifters: Tastes & Preferences of Consumers Income of Consumers Related Goods: Substitutes & Complements Expectations of Future Price Changes Size and demographics of population

Seasonality  The demand for some goods will shift depending what season it is and what they could be used for  Example: Demand for snowblowers is high in the winter, but low in the summer

Derived Demand  Demand on one good or service changes as a result of demand on another good or service  Example: During the Gold Rush of 1849 the demand for gold had increased sharply. As a result the demand for picks and axes increased dramatically as well