Starter Activity Look at the homework task What does your graph look like? What relationship between price and demand have you identified? Discuss in groups

Lesson Objectives To understand the relationship between Price and Demand To understand other factors that can affect Demand

What determines demand Discuss in groups

What determines Effective Demand? Population structure Taste/Fashions Substitute/Complementary products Price Income levels Competition

The Demand Curve Price (£) Demand The demand curve slopes downwards from left to right (a negative slope) indicating an inverse relationship between price and the quantity demanded. Quantity demanded will be higher at lower prices than at higher prices. As price falls, quantity demanded rises. As price rises, quantity demanded falls. Price (£) £10 £5 Demand 100 150

Shifts in the demand curve What would happen on your diagram if Pepsi invested £10million on an advertising campaign? How would we show this on the curve?

Shifts in Demand Curves Shifts will occur if there are changes that will affect demand at all price levels Changes in price will NOT result in shifts in the demand curve – just a movement along it

Shifts in Demand What changes could have resulted in shifts shown here? Price (£) £10 D1 Demand D2 10 100 200

Inferior Goods For most products, as incomes rise, people have more spending power, and tend to demand more products. Luxury, expensive items tend to be demanded more especially as incomes rise Inferior goods are exceptions to this, and tend to be demanded less as incomes rise and more as incomes fall – can you think of some examples?

Plenary Draw a demand curve diagram that will illustrate the following Demand for England Football shirts during a major tournament Demand for brand new BMW cars during recession