“How Markets Work”

To want or not to want? That is the question! What is Demand? To want or not to want? That is the question! Ferrari F-430 Retail: $ 350,000 Rolex Crown Collection Retail: $ 64, 500 Chloe Platinum 2ct Eternity Ring $ 5,629.73 ISA Ancona Yacht List: $14,500,000 Lamborghini Gallardo Retail: $310,000

Does WANT = DEMAND? NO! Demand is : The AMOUNT consumers will BUY @ various PRICES! For there to be demand consumer’s must have the desire, ability, and willingness to purchase goods and services.

The LAW of DEMAND As prices rise, the QUANTITY DEMANDED falls. and vice versa As prices fall, the QUANTITY DEMANDED rises.

Demand Schedule A TABLE showing the amount that will be purchased at various prices. CANDY BAR Bar Price Quantity $ .25 .75 1.50 2.00

Demand Curve A GRAPH that shows the AMOUNT that will be purchased at VARIOUS PRICES. Price of Candy Bar Price Quantity $ .25 .75 1.50 2.00 $2.00 1.00 .75 0.50 0.25 Quantity of Candy Bars 17

Changes in QUANTITY Demanded… A change in how much is bought because of a change in price It is show by movement along a demand curve caused by a CHANGE IN PRICE D1 Price (P) Quantity Demanded (QD) A B Q1 Q2 P1 P2

What causes a change in quantity demanded? A change in price.

Will you never be willing or able to buy this car? Do you have demand for this car today? Will you never be willing or able to buy this car?

IS DEMAND… CONSTANT??? NO

Changes in DEMAND A Change in Demand means: Consumers purchase more or less products at EVERY PRICE LEVEL causing a change in the demand schedule and a shift of the curve. An increase in demand causes the demand curve to shift to the right. An decrease in demand causes the demand curve to shift to the left. Price (P) P 2 P 1 D1 D2 Quantity (Q)