Objective: We will create demand schedules and use the information to graph demand curves, and differentiate between events that cause shifts and movement along the curve. Agenda – Bell Ringer: CBM #3 (Chapters 5 and 6) – Preview – How much are you willing to pay? – The Law of Demand and Demand Shifters – Activity – Demand headlines – Exit Ticket – Find your own!

The Law of Demand How Consumers Make Choices Economics Chapter 5 Supply and Demand

Classroom Demand Curve Price ($) # of Students Willing to Pay

Classroom Demand Curve Now answer the following questions on your handout: 1.Why might some students be willing to pay $10 for this product? 2.Why might some students choose not to pay even $1 for this product? 3.You have created a demand curve for the product. What happens to the quantity demanded for this product when the price goes down? When the price goes up? 4.Most demand curves look similar to the one you created. Given this, what do you think the “law of demand” might say?

How Do Demand and Price Interact? Demand: what people are willing and able to pay at various prices Demand Schedule: table that shows quantity demanded at a specific price Demand Curve: the result of graphing the data of a demand schedule

The Law of Demand As the price increases, the quantity demanded for a good or service does what? It Decreases! What happens as price declines? The Quantity demanded Increases!

Law of Demand Continued Law of diminishing marginal utility: the more you have consumed, the less satisfied you are The income effect: since income is limited, the more the price rises, the less you are able to consume The substitution effect: if 2 goods satisfy the same want people will consume the cheaper of the two

Shifting Demand Curves Movement along the demand curve shows how the quantity demanded changes as the price changes Price Quantity D

Shifting Demand Curves What causes the curve to shift to a new position on the graph?

What Causes Demand to Change? Factors other than price can cause the demand curve to shift (Demand Shifters) 1.Changes in consumer income 2.The number of consumers 3.Consumer tastes and preferences 4.Consumer expectations 5.The price of substitute goods 6.The price of complementary goods Remember: a change in Price is NOT a demand shifter!

Analyzing Demand Headlines Pick a partner Read instructions on handout Be prepared to draw your curve on the board and explain which demand shifter might explain your curve.

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Exit Ticket Find a Newspaper or Internet Headline that will shift the demand curve for a commonly used good or service. Draw a demand curve that reflects how the headline might shift the demand curve for the good or service. Explain what factor(s) affect the curve and why.

Recap: Objective: We will create demand schedules and use the information to graph demand curves, and differentiate between events that cause shifts and movement along the curve. Return Unit Tests

Price Quantity Demanded Demand Curve (original)