1. What are some things you buy as substitutes, or in place of another product? 2. What are some things you buy more of when you have more money (aka normal goods). 1 Take out Spiral What will we learn today? What will we learn today? Standard Monetary and non-monetary incentives and how they change behavior. Standard Relationship between incentives and law of supply and law of demand. Unit: Demand Ch 4 Directions: Bellwork, answer the following question. You need to write a one paragraph response. There should no talking during the Bellwork.

Assignment : 4.1 Understanding Demand Notes 2

Assignment : 4.1 Understanding Demand Demand: the desire to own something and the ability to pay for it $Law of demand: when a good’s price is lower, people will buy more of it. Higher = people buy less Example: if pizza is a dollar, people buy more. If pizza is ten dollars, people will buy less. $Supply and Demand of goods determines the price and quantity produced of most goods. 3

Substitution effect: when people react to an increase in price by consuming less of that good and more of other goods. Example: pizza got more expensive, so I ate beans & tortillas instead. Pizza’s price going up resulted in my buying more beans & tortillas. Income effect: the change in consumption resulting from a change in real income. Example: John buys two donuts every morning for $1 (50 cents each). One day the price goes up to $1 each. Now John just buys one. The demand for donuts goes down. 4

Video Example of Demand Charlie and Chocolate Factory 0:14 – 0:19 5

Demand schedule: a table that lists the quantity of a good a person will buy at each different price. Market demand schedule: a table that lists the quantity of a good that all consumers in a market will buy at each different price 6

Demand curve: a graphic representation of a demand schedule Lowest price on the bottom, highest on top. Lowest quantity on the left, highest on the right. 7

Assignment :Create a Demand Curve-Look at the example and then create your own product. EL= Do on white boards 8