Agenda Bellringer Review questions Notes: Graphing and Shifting of Demand Curve Independent work (worksheet)

Objective Students will identify how demand shifts by completing a worksheet

Review Questions  What is demand?  Desire to have something AND the ability to pay for it  What is the Law of Demand?  When price increases, demand decreases  What is a demand schedule?  A list of how many people would purchase a produce at various prices

Demand

Graphing Demand Graphs for supply and demand will ALWAYS: List prices on the vertical axis List quantity demanded on horizontal axis

Graphing Demand When a demand schedule is graphed, with all factors constant, it will always look like this: This line is called a demand curve….

Changes in Demand Any change in demand due to price is movement ALONG THE CURVE

Changes in Demand Changes in things OTHER than price, cause the demand curve to SHIFT The curve will shift inward if there is a decrease in demand The curve will shift outward if there is an increase in demand

Changes in Demand Several factors will change the demand for the good (shift the entire demand curve) As an example, suppose consumer income increases. The demand for Widgets at all prices will increase.

Changes in Demand As an example, suppose Widgets become less popular to own. Demand will also decrease due to changes in factors other than price.

What causes shifts? BITER!!! B (uyers #) I (ncome) T (astes) E (xpectations) R (elated goods)

Buyers (number of) The number of people in a given market can increase or decrease Example: Population increases or decreases for some reason Think: Florida in winter – does population increase or decrease? What does that do to Demand?

Income How much (or little) income you plan on making determines your spending habits Examples: Construction worker knows he is getting laid off – increase or decrease in demand?

Tastes Whatever is in style right now, has higher demand. Advertisements affect demand. Example: Is there high or low demand for overalls and jean jacket combos? Double denim?

Expectations Knowing that the costs of certain items will increase at different times affects demand Consider: What time of year would you buy a boat?

Related Goods The cost and availability of substitute and related goods affect demand Example: Hot dogs are impossible to find. The only hot dog plant in America has been shut down because of unsanitary conditions. What happens to the demand for hotdog buns?

Ready to practice? First – together Then – on your own

Agenda Bellringer Review Questions Finish/review demand worksheet Elasticity of Demand (Notes) Video Clip: Elasticity of Demand Textbook reading: Supply

Review Questions What is the law of demand? Price goes up, demand goes down What are the determinants of demand? Buyers (#), income, tastes, expectations, related goods What do you label the vertical axis? Price What do you label the horizontal axis? Quantity Which way does the curve shift if there is an increase in demand? Outward (right) Which way does the curve shift if there is a decrease in demand? Inward (left)

Demand worksheet Take five minutes to finish demand worksheet from yesterday We will review as a class

Video clip Determinants of demand….

Elasticity of Demand Elasticity of Demand: measure of how consumers react to a change in price Not all shifts in demand are 100% true all the time. There is a gray area that is elastic Like a rubber band, these situations are flexible

Inelastic If an item is inelastic, it is NOT flexible. Demand DOES NOT CHANGE because of price Tends to be needs not wants Examples: Fuel Milk Cars Eggs Propane

Elastic Elastic demand is like a rubber band. It bends, expands, and contracts. Very flexible. The demand for these goods WILL CHANGE BASED ON PRICE Tends to be wants not needs Examples: Dunkin Donuts Early bird specials Candy

Textbook reading Please read pages Document all blue vocabulary words in your notes Draw a supply curve and identify how it is different from a demand curve