10/16 Do Now10/16 Do Now  What types of product do you buy:  The most often?  In the largest quantities?

Microeconomics  The area of economics that deals with behavior and decision making by small units, such as individuals and firms.

Utility  Amount of usefulness or satisfaction someone gets through the use of a product

Market EconomyMarket Economy  People and firms act in their own best interest to answer the economic questions of what, how and for whom  Businesses need knowledge if demand to decide

Demand  The desire, ability, and willingness to buy a product

Demand ScheduleDemand Schedule  What happens as the price decreases?  What happens as the price increases?

Demand CurveDemand Curve  You read it from left to right.  Is the demand curve going up or down?

Demand CurveDemand Curve  A graph showing the quantity demanded at each and every price.

Demand ScheduleDemand Schedule  A listing that shows the various quantities demanded of a particular product at all prices

Demand Curve or Demand Schedule

Law of DemandLaw of Demand  As price increases, demand decreases  As price decreases, demand increases  In other words……Price affects demand

Market Demand CurveMarket Demand Curve  Quantity demanded by everyone who is interested in the product. ….in other words, it is not based on one individual but the whole market.

Marginal UtilityMarginal Utility  Extra usefulness or satisfaction a person gets for buying one more unit of a product.  In other words…..if you buy more, you are more satisfied

Diminishing Marginal Utility  Satisfaction begins to diminish the more you use the product  Which means…….you are not willing to pay as much for the 2 nd product  Example a buffet

Create Your OwnCreate Your Own  Demand Schedule  Demand Curve  Choose something you buy often.  You need to include:  5 prices  5 quantities

Sample Market: Movies at home Slow Fade Out for Video Stores   Read Together

Sample Market: Movies at home 1.Draw a timeline of movie rentals based on article 2.Why was Hollywood fearful of movie rentals? 3.Why did the market for video rental develop slowly? 4.Why did the market flourish? 5.Why did consumers turn away from video stores?

YouTube ResearchYouTube Research  Find a video that talks about the Law of Supply and Law of DEmand.  Cope the link into a google word document  Based on the video define Law of Supply and Law of Demand.  Rate the video on a scale of 1 to 4 on how well it explains the information.  or share me your document

10/23 Do Now10/23 Do Now  What is the Law of Demand?  As price increases, demand decreases  As price decreases, demand increases

Todays AgendaTodays Agenda 1.Do Now 2.Quick notes on Change in Demand Quantity 3.Change in Demand Project 4.Notes on Changes in Demand Factors 5.Case Study: McDonalds

Changes in Quantity Demanded A movement along the demand curve that shows a change in the quantity of the product purchased in response to a change in price.

Income EffectIncome Effect  T he change in quantity demanded because of a change in price that alters consumers’ real income.

Substitution EffectSubstitution Effect  The change in quantity demanded because of the change in the relative price of the product.

Change in DemandChange in Demand  People are now willing to buy different amounts of the product at the same prices.

Change in Demand FactorsChange in Demand Factors  Consumer Income  Consumer Taste  Substitutes  Complements  Changes in Expectations  Number of Consumers

Example: Movie Industry Changes  Movie Theatres  Video Cassettes  Movie Rental Stores  DVDs  Netflix  Online Streaming  Redbox and other rental stations

Project: Change in DemandProject: Change in Demand  Explain the relationships between Changes in Demand Factors and changes in the movie industry

Assignment: Change in Demand 1.Read and review the factors on page Draw Chart 3.Complete chart by explaining how demand changes for the movie industry was affected by a specific factor

Assignment: Change in Demand IncomeTasteSubstitutesComplementExpectations# of Consum ers Movie Industry Change Reason

Assignment: Change in Demand  Guided Question for Reasons 1.Why did the movie industry change occur? 2.How was it affected by demand? 3.Use the factor vocabulary in your reason

Change in Demand FactorsChange in Demand Factors  Consumer Income: Consumer’s money  Consumer Taste: What a consumer likes or does not like  Substitutes: A products that can be used in place of another product  Complements: Goods that are related to another good  Changes in Expectations: The way consumers think about the future of a product  Number of Consumers: Increase in the number of consumers can cause the market demand curve to shift.

Case Study: McDonaldsCase Study: McDonalds  Read page 100  Answer question 1-4 in your notebook