AGENDA Tues 2/7 & Wed 2/8 Turn in Take Home Quiz Journal Entry #6: High Priced Athletes Law of Demand (Graph it!) Demand Curves Diminishing Marginal Utility HW: Read p 66-70 Q#2-6 p 70 DUE: Thursday/Friday 2/9-10

Journal Entry #6: High Priced Athletes Fans often complain that athletes get paid too much money and that these higher salaries lead to higher ticket prices. Do you agree or disagree with this statement? Higher ticket prices lead to lower sales. Why does this happen? Why would they raise ticket prices? 2

Markets = Supply &Demand demand refers to the buying side supply refers to the selling side

Demand markets are places where people come together to buy and sell goods or services ex: swap meet, stock market, grocery store, E-Bay good is a tangible item [product] that gives a person utility or satisfaction Utility: something that is useful or designed for use service is an intangible item that gives a person utility or satisfaction

Willing and able?

What is Demand? Demand- is the willingness and ability to purchase a good or service. willingness to purchase refers to a person’s want or desire for a good ability to purchase means having the money to pay for the good. You may want something but may not have the ability to pay for it. There is no demand unless BOTH components are there.

The Law of Demand Law of Demand Quantity Demanded (QD) as the price (P) of a good increases, the quantity demanded (QD) of the good decreases as the price of a good decreases, the quantity demanded increases Inverse Relationship between P and QD Quantity Demanded (QD) the number of units of a good purchased at a specific price

(where P = price and QD = quantity demanded Law of Demand Law of Demand (where P = price and QD = quantity demanded If P  then QD  If P  then QD 

What is quantity demanded? Quantity demanded - refers to the number of units of a good purchased at a specific price. (It is always a number.) See example on pg 67

Law of Demand A demand schedule a numerical chart that illustrates the law of demand A demand curve is graphic representation of the law of demand is a graphic plotting of various price-quantity comparisons

Example of demand schedule & graph of cookies

How much would you pay for a cookie?

Why do price and quantity demanded move in opposite directions? The law of diminishing marginal utility (satisfaction) says that as a person consumes additional units of a good that eventually the utility (satisfaction) gained from each additional unit of the good decreases. You get more utility (satisfaction) from the first Chipotle burrito that you eat then you do from the 2nd, 3rd, and 4th burrito that you eat.

Law of Diminishing Marginal Utility As goods consumed increased the usefulness of that good decreases. Is your fifth Chipotle burrito as useful as your first? or? 14

Law of Diminishing Marginal Utility The more satisfaction (utility) you receive from a unit of good the higher price you are willing to pay for it. The less satisfaction (utility) you receive from a unit of good the lower price you will pay for it. How much will you pay for that 1st Chipotle burrito? 2nd? 3rd? 4th?

The responsibilities of buyers The buyer has the duty: to make informed decisions to inspect the product to make payments as contracted Buyers have the responsibility to become informed about the goods they buy. Once a buyer agrees to purchase a good, he has the ethical responsibility to pay the seller the agreed-upon price.

Homework: Due Thurs/Fri Read p 66-70 Q#2-6 p 70 DUE: Thurs/Fri 2/9-10