1. UNIT VI – Fundamentals of Economics
Demand
UNIT VI – Fundamentals of Economics

2. For Demand to Exist… Want goods and/or services Willing to buy
Ability to buy

3. Law of Demand If price is high; demand is low
If price is low; demand is high

4. Demand Schedule
Table that lists the various quantities of a product/ service that someone is willing to buy over a range of possible prices
Demand Schedule
Price
Quantity
$10 1 $6 2 $2 10

5. Demand Curve
$10 $8 $6 $4 $2
Price
Quantity Demanded

6. Market v. Individual Demand
Individual – demand of one consumer
Market – total demand of all consumers

7. Changes in Demand Number of consumers (market size)
Income of consumers
Consumer tastes
Consumer expectations (quality and future price)
Substitute Goods - Competing products
If price of one increases; demand of the other increases
Papa John’s v. Pizza Hut
Complementary Goods - Demand in one causes demand in other
Ketchup and Mustard
CD player demands CDs

8. Diminishing Marginal Utility
Utility – pleasure, usefulness, or satisfaction we get from a product/service
Will vary from person to person
Utility will decrease as more units are consumed/bought
Example: eating too much pizza or a fad getting old

9. Showing changes in demand on the curve…

10. Elasticity of Demand
All goods and services are not affected equally by changing factors
Demand elasticity – the extent to which a change in price causes a change in the quantity demanded

11. If a good or service is elastic, its demand changes greatly due to price changes
Candy – price goes up, demand will go down
If a good or service is inelastic, its demand does not change greatly due to price
Gasoline – prices go up, demand remains relatively the same