1. 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 assignment 2 What will we learn today? What will we learn today? Standard 12.1.3 Monetary and non-monetary incentives and how they change behavior. Standard 12.2.1 Relationship between incentives and law of supply and law of demand. Unit: Demand Day 3 Directions: On Day 3 of your Bellwork, answer the following question. You need to write a one paragraph response, so fill out all of Day 3. There should be little to no talking during the Bellwork.

2. Assignment 3: 4.1 Understanding Demand Notes 2

3. Assignment 3: 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. 3

4. 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 hot dogs instead. Pizza’s price going up resulted in my buying more hot dogs. 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

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

6. 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

7. 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

8. Assignment 4: pg. 83, 1 - 6 8

9. Assignment 5: 4.2 Shifts in the Demand Curve People buy different amounts of goods and services when price goes up or down, this is called a change in quantity demanded. Sometimes something other than prices causes demand as a whole to increase or decrease; this is called a change in demand. 9

10. Normal goods: stuff you want more of when you make more money Example: groceries, clothes, etc. Inferior goods: stuff you buy less of when you make more money Example: top ramen, generic cereals, used cars 10

11. There are 6 factors that effect a change in demand: 1. Consumer income- if income increase, demand increases. If income decreases, demand decreases. (Mr. Rob buys more Claim Jumper when he has money) 2. Consumer tastes- people buy more of a product when they are in season or advertised. (pumpkin latte at Starbucks) 3. Substitutes- goods used in place of another. (Mr. Rob buys Wal-Mart toilet paper) 11

12. Video Example of Substitutes Jingle All the Way 0:16 – 0:21 12

13. 4. Complements- two goods that are bought together and stay together. When demand of one product increases demand for the other. (Ex. When hot dogs go on sale, leads to increase in demand for hot dog buns.) 5. Change in expectations- the way people think about the future affects what they buy. (Mr. Rob waiting to buy stuff for Christmas sales) 6. # of customers- as population increases, people buy more products. Demand as a whole increases. 13

14. *** Increase in demand causes demand curve to shift to the right. Ex. Increase in income or population *** Decrease in demand causes demand curve to shift to the left. Ex. Income or population decrease. 14