DEMAND Definition: The various quantities of a good or service that someone is WILLING and ABLE to buy at DIFFERENT PRICES at a PARTICULAR TIME WILLING.

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Presentation transcript:

DEMAND Definition: The various quantities of a good or service that someone is WILLING and ABLE to buy at DIFFERENT PRICES at a PARTICULAR TIME WILLING and ABLE Does Mr. Bull have demand for…?:

YES!

NO!!!

NO!

Individual Demand vs. Market Demand I may not have demand for a porsche, but others do… Market Demand – Sum of all individual’s demand

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Graphing Demand Demand ScheduleDemand Curve

Law of Demand As Price increases, Quantity Demanded decreases As Price decreases, Quantity Demanded increases As P↑, Qd↓ As P↓, Qd↑

Why does the Law of Demand occur? The law of demand is the result of three separate behavior patterns that overlap: 1.The Income effect 2.The Substitution effect 3.The Law of Diminishing Marginal Utility We will define and explain each… 10 Copyright ACDC Leadership 2015

Change in Quantity Demanded Income Effect If price goes down, purchasing power goes up and vice versa Substitution Effect Pepsi vs. Coke

Nature of Demand Curve Diminishing marginal utility What would compel you to buy additional JBCs?

Can you see the Law of Diminishing Marginal Utility in Disneyland’s pricing strategy? Copyright ACDC Leadership 2015

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Homework Read pgs and complete Demand worksheet

Change in Quantity Demanded

Individual Demand Quantity Demanded (bushels per week) Price (per bushel) PQdQd $ Individual Demand P Q D1D Demand Can Increase or Decrease Increase in Demand Decrease in Demand D2D2 D3D3 3-17

Individual Demand Quantity Demanded (bushels per week) Price (per bushel) PQdQd $ Individual Demand P Q D1D Demand Can Increase or Decrease Decrease in Demand D2D2 D3D3 Change in Demand Change in Quantity Demanded 3-18

Change in Demand 1.Change in Income mo’ money = mo’ problems purchases normal vs. inferior 2.Change in Prices and Availability of Substitutes ex: Pens and Pencils 3.Change in Prices and Availability of Complements ex: Paper and Pencils 4.Change in Weather or Seasons ex: Shorts in winter, Sleds in summer, Gas? 5.Change in Number of Buyers ex: larger/smaller market, population change, technology 6.Change in Styles, Tastes, Habits, Preferences fashion, coolness, trends – ex: 7.Change in Expectations future oriented – ex: harvest, technology

Practice Work through the worksheet Homework: Read pgs and complete Supply worksheet