1. AGENDA Tues 2/7 & Wed 2/8 Turn in Take Home Quiz
Journal Entry #6: High Priced Athletes
Law of Demand (Graph it!)
Demand Curves
Diminishing Marginal Utility
HW: Read p Q#2-6 p 70
DUE: Thursday/Friday 2/9-10

2. Journal Entry #6: High Priced Athletes
Fans often complain that athletes get paid too much money and that these higher salaries lead to higher ticket prices.
Do you agree or disagree with this statement?
Higher ticket prices lead to lower sales.
Why does this happen?
Why would they raise ticket prices? 2

3. Markets = Supply &Demand
demand refers to the buying side
supply refers to the selling side

4. Demand
markets are places where people come together to buy and sell goods or services
ex: swap meet, stock market, grocery store, E-Bay
good is a tangible item [product] that gives a person utility or satisfaction
Utility: something that is useful or designed for use
service is an intangible item that gives a person utility or satisfaction

5. Willing and able?

6. What is Demand?
Demand- is the willingness and ability to purchase a good or service.
willingness to purchase refers to a person’s want or desire for a good
ability to purchase means having the money to pay for the good.
You may want something but may not have the ability to pay for it.
There is no demand unless BOTH components are there.

7. The Law of Demand Law of Demand Quantity Demanded (QD)
as the price (P) of a good increases, the quantity demanded (QD) of the good decreases
as the price of a good decreases, the quantity demanded increases
Inverse Relationship between P and QD
Quantity Demanded (QD)
the number of units of a good purchased at a specific price

8. (where P = price and QD = quantity demanded
Law of Demand
Law of Demand
(where P = price and QD = quantity demanded
If P  then QD 
If P  then QD 

9. What is quantity demanded?
Quantity demanded - refers to the number of units of a good purchased at a specific price. (It is always a number.)
See example on pg 67

10. Law of Demand
A demand schedule a numerical chart that illustrates the law of demand
A demand curve is graphic representation of the law of demand
is a graphic plotting of various price-quantity comparisons

11. Example of demand schedule & graph of cookies

12. How much would you pay for a cookie?

13. Why do price and quantity demanded move in opposite directions?
The law of diminishing marginal utility (satisfaction) says that as a person consumes additional units of a good that eventually the utility (satisfaction) gained from each additional unit of the good decreases.
You get more utility (satisfaction) from the first Chipotle burrito that you eat then you do from the 2nd, 3rd, and 4th burrito that you eat.

14. Law of Diminishing Marginal Utility
As goods consumed increased the usefulness of that good decreases. Is your fifth Chipotle burrito as useful as your first? or? 14

15. Law of Diminishing Marginal Utility
The more satisfaction (utility) you receive from a unit of good the higher price you are willing to pay for it.
The less satisfaction (utility) you receive from a unit of good the lower price you will pay for it.
How much will you pay for that 1st Chipotle burrito?
2nd? 3rd? 4th?

16. The responsibilities of buyers
The buyer has the duty:
to make informed decisions
to inspect the product
to make payments as contracted
Buyers have the responsibility to become informed about the goods they buy.
Once a buyer agrees to purchase a good, he has the ethical responsibility to pay the seller the agreed-upon price.

17. Homework: Due Thurs/Fri
Read p Q#2-6 p 70
DUE: Thurs/Fri 2/9-10