1. The Demand Curve and Elasticity
Chapter 7 Section 2 Notes
The Demand Curve and Elasticity

2. YouTube Clip of the Day

4. Demand Schedule
Table showing quantities demanded at different possible prices.

5. Demand Curve
Downward-Sloping line that shows in graph form the quantities demanded at each possible price.

6. KEEP IN MIND
A change in quantity demanded (Is NOT the same as ) ≠ a change in demand.

7. Determinants of Demand
Factors that affect demand for a specific product or service.
Change in taste & preferences
Substitute Goods
Complementary Goods
Change in Population
Change in Income

8. Cont. Changes in Taste & Preferences Change in Population
Change in Income

9. Cont.
Substitute Goods – Goods that can be used in place of another good.
Complementary Goods – Goods that go hand in hand (Generally bought and sold together for joint use).

10. Change in Demand vs. Quantity Change

11. Increase in Population

12. Decrease in Income

13. Substitute Goods

14. Complementary Goods

15. The Price Elasticity of Demand
Elasticity – Economic concept dealing with consumer’s responsiveness to an increase or decrease in the price of a product.
Elasticity of Demand – How much the demand varies according to changes in price.

17. Elastic Demand
Situation in which a given rise or fall in product’s price greatly affects the amount that people are willing to buy.
These are goods that usually have many substitutes or they are luxury goods.
Example – Red Bull, an iPod.

18. Inelastic Demand
Situation in which a product’s price change has little impact on the quantity demanded by consumers.
These are goods that are necessities or have no or very few substitutes
Example – A medication you have to have or Gasoline