Bellringer—Each partner pair should retrieve the following from the back of the room. You have one minute after the bell rings to be in your seat with the materials. 1 small whiteboard 1 black dry erase marker 1 color (other than black) dry erase marker Sock eraser Put these under your desk.

What is the difference between a change in demand and a change in quantity demanded? Be able to graphically apply the determinants of demand. Agenda 1. Demonstration 2. Lecture 3. Whiteboard Practice Problems 4. Group Project

1. Desire to own 2. Ability and willingness to pay

Law of Demand— As prices decrease, the QUANTITY demanded INCREASES As prices increase, the QUANTITY demanded DECREASES Prices QD Prices QD

Demand Schedule—a table that lists the various quantities demanders will purchase at various prices. Demand Curve—schedule in graph form Individual—one person’s demand for a product Market—a group’s demand for a product PriceQuantity $2.000 $1.501 $1.002 $0.503

Quantity Demanded—ONE quantity at ONE price Demand—List of quantities at different prices illustrated by a demand schedule and a demand curve. Demand Schedules Individual Demand Schedule Price of a slice of pizza Quantity demanded per day $.50 $1.00 $1.50 $2.00 $2.50 $ Market Demand Schedule Price of a slice of pizza Quantity demanded per day $.50 $1.00 $1.50 $2.00 $2.50 $

Market Demand Curve Slices of pizza per day Price per slice (in dollars) Demand

Change in QUANTITY demanded Movement along the demand curve Caused by a change in the PRICE of the product Change in DEMAND Shift of the entire curve Caused by one of the determinants of demand

Factors that shift the demand curve Taste and Preferences Related goods—prices of substitutes and complements Income Buyers—Number of buyers Expectations—CONSUMER expectations

Shifts the curve LEFT or RIGHT NOT up or down If demand INCREASES, the demand curve shifts to the RIGHT If demand DECREASES, the demand curve shifts to the LEFT Quantity Demanded (bushels per week) Price (per bushel) P Q D1D Increase in Demand Decrease in Demand D2D2 D3D3

$ Price of Ice-Cream Cone Quantity of Ice-Cream Cones 0 Decrease in demand A popular new diet forbids dairy D1D1 D2D2

$ Price of Ice-Cream Cone Quantity of Ice-Cream Cones 0 Decrease in demand The price of frozen yogurt drops D1D1 D2D2

$ Price of Ice-Cream Quantity of Ice-Cream 0 Increase in demand D1D1 D2D2 The price of cake drops

$ Price of Ice-Cream Cone Quantity of Ice-Cream Cones 0 Increase in demand An increase in income... D1D1 D2D2

Inferior good: demand decreases when income increases. P Mrs. Powell’s demand for Wal-mart brand ice cream decreases after she receives a $10,000 pay increase D1 D2 Q

$ Price of Ice-Cream Cone Quantity of Ice-Cream Cones 0 Increase in demand MTSU increases attendance by 10,000 D1D1 D2D2

$ Price of Ice-Cream Cone Quantity of Ice-Cream Cones 0 Decrease in demand Ben & Jerry’s offers a FREE ice cream cone on Sunday. This is the demand curve for FRIDAY. D1D1 D2D2

What is the difference between a change in QUANTITY demanded and a change in DEMAND?

Draw a demand and supply graph in black (brown). Title it “Beef Consumption in May.” You do not need numbers on the graph.

Pop Quiz— (Points 1-3) Draw a demand and supply graph for Beef Consumption in MAY. Point 1. Axes are labeled correctly and original D curve is in the correct shape. ONE will be a no shift. 4. Price of beef expected to rise in June. 5. Millions of immigrants swell the US population 6. Pork prices drop 7. Mad Cow disease comes to the US 8. Beef prices fall. Consumers buy more. 9. Real income for US drops for 3 rd month 10. Charcoal prices go up (You will only eat burgers the right way—on a charcoal fired grill!!!) 11. When demand increases, what happens to the equilibrium price and equilibrium quantity. 12. When demand decreases, what happens to the EP and EQ? 13. Explain the difference b/wn a shift in the demand curve and a movement along the demand curve. In other words, what causes each?

Draw a demand and supply graph for a product in one color. Show an increase and a decrease in demand in different colors. Write out 6 scenarios. One for each determinant and one that doesn’t change demand. You may write it on the poster or on your own notebook paper. DON’T write down the ANSWER on the poster. 1-2 people in charge of drawing/writing. 2-3 people in charge of scenarios.

“Rising oil prices have caused a sharp decrease in the demand for oil.” Speaking precisely, and using terms as they are defined by economists, choose the statement that best describes this quotation. (A) The quotation is correct: An increase in price always causes a decrease in demand. (B) The quotation is incorrect: An increase in price always causes an increase in demand, not a decrease in demand. (C) The quotation is incorrect: An increase in price causes a decrease in the quantity demanded, not a decrease in demand. (D) The quotation is incorrect: An increase in price causes an increase in the quantity demanded, not a decrease in demand.

Other things constant, which of the following would not cause a change in the demand (shift in the demand curve) for mopeds? (A) A decrease in consumer incomes (B) A decrease in the price of mopeds (C) An increase in the price of bicycles (D) An increase in people’s tastes and preferences for mopeds

“As the price of domestic automobiles has inched upward, customers have found foreign autos to be a better bargain. Consequently, domestic auto sales have been decreasing, and foreign auto sales have been increasing.” Using only the information in this quotation and assuming everything else constant, which of the following best describes this statement? (A) A shift in the demand curves for both domestic and foreign automobiles (B) A movement along the demand curves for both foreign and domestic automobiles (C) A movement along the demand curve for domestic autos, and a shift in the demand curve for foreign autos (D) A shift in the demand curve for domestic autos, and a movement along the demand curve for foreign autos

Which of the following would increase demand for a normal good? A decrease in: a. Price b. Income c. The price of a substitute d. Consumer taste for a good. e. The price of a complement

A decrease in the price of butter would most likely decrease the demand for A. margarine B. Bagels C. Jelly D. Milk E. Syrup

Draw a demand and supply graph for a product. Show an increase in demand in one color and a decrease in demand in another color. State which color is which out to the side. Give an example of what would cause the increase and what would cause the decrease. List and briefly explain the 5 determinants of demand. State the difference b/wn a change in demand and QD. Due Tuesday, but not really…not taking up until we do Supply on the back.