Demand
Demand Demand: a buyer’s willingness and ability to buy https://youtu.be/i-SxCCQfdrk
What is your demand? Imagine I gave you fifty dollars. Realistically, what is the maximum you would pay for: A can of soda? A Chick-fil-a sandwich? A hat? A jar of Nutella? The ability to punch one celebrity in the face, no questions asked?
Demand Law of Demand: When the price of something goes up, you will want less of it When the price of something goes down, you will want more of it
Drawing Demand We can draw your demand at different prices on a graph, called a demand curve Shows how much quantity you would demand at a certain price
Why does Demand go Down? Remember the Law of Demand: The higher the price, the _________ you will want The lower the price, the _________ you will want
Demand can Change! There are many times when demand for a good increases or decreases.
Why does demand go up or down?
Why does demand go up or down? Your Income: Normal goods The more money you make, the more you will demand the good Inferior goods The more money you make, the less you will demand the good
Why does demand go up or down? Your preferences: When your preferences change, you demand more or less
Why does demand go up or down? The price of a competing good: When the price of Coke goes up, will people want more or less Pepsi? When the price of Coke goes down, will people want more or less Pepsi? Called “Substitutes”
Why does demand go up or down? The price of a connected good: When the price of Peanut Butter goes up, will people want more or less jelly? When the price of jelly goes down, will people want more or less peanut butter? Called “Complements”
Why does demand go up or down? Number of Buyers: The more people, the more demand
Why does demand go up or down? What you think will happen to price: When you know a sale is coming up next week, will you buy now or wait?
Can you show demand changing? Change in Demand: a shift in the demand curve Increase in demand: a shift to the right Decrease in demand: a shift to the left
Practice showing demand changes What are the reasons demand changes? Your income Your preferences Price of competing good (substitutes) Price of connected good (complements) Number of buyers What you think will happen to price