Basic Economic Concepts Supply and Demand Purpose: Identify changes in events that will result in a change in demand.

I. Goals Correctly label and graph a demand curve and shift. Identify an increase and decrease in demand. Identify the determinants of demand and their effect on the shifting of the demand curve.

IV. Determinants of Demand Will either increase or decrease quantity demanded regardless of price Changes in Income Consumer Expectations Changes in Population Tastes and Preferences Prices of Related Goods

IV. Determinants of Demand Changes in Income: Income affects our demand for products Normal Goods Goods that are demanded more when income rises Ex. Cheerios Inferior Goods Goods that are demanded less when income rises Ex. Toasty O’s (generic brand) Recession and boom

C. Determinants of Demand Consumer Expectations: Expectations about the future can impact demand TVs just before black Friday Demand shifts downward Demand for school supplies just before late July and August

C. Determinants of Demand Changes in Population: An increase in the amount of people leads to higher demand for a given product

C. Determinants of Demand Taste and Preferences: Cannot be totally explained, but demand for products shift depending upon the tastes of the population frozen

C. Determinants of Demand Prices of Related Goods: Demand for one good can be effected by a change in demand for another good. Complimentary Goods Goods generally purchased and consumed together. Ex. Salt and Pepper Substitute Goods Goods used in place of another good. Ex. Oranges and apples