1. Do Now! Have you ever bought something that was on-sale?
What was it? How much?
Would you have bought it at the regular price?
How might the answer to Q2 relate to Marginal Utility?

2. I want this, but do I matter?
Demand!!!
I want this, but do I matter?

3. Key Terms
Price (P)
Quantity Demanded (Qd): The number units demanded at a specific price
Law of Demand: P and Qd are inversely related
(lower P = more Qd)

4. Demand Schedule and Demand Curve
How much would you spend for a pair of NHL Stanley Cup Finals game 7 tickets? (assuming the Sharks were in the Finals?)
 How about the 2nd pair? 3rd?

5. Demand Schedule and Demand Curve
Demand Schedule: Numerical depiction of all quantities demanded at each price.
Demand Curve: Graph (line) of all Quantities Demanded at each Price.

6. Sample Demand Curve
As P changes, we move along the curve

7. Why D is Downward? Diminishing Marginal Utility
we get less utility with each additional good = will pay less…
Income effect: Lower prices = can afford more
Substitution effect: People switch to cheaper goods

8. Demand = Marginal Benefit
Downward sloping due largely to L.D.M.U. (and Income/Sub effect)
Demand shows price willing and able to pay at each quantity
 Willing to pay up to Marginal Benefit [MB] (or Marginal Utility [MU])
* D = MB

9. Practice
I am selling A’s in this class.
How many students do you think are willing and able to buy an A for:
- $0? 100? 250? 500? 1000? 2000?
- Create a demand schedule
- Create a demand curve

10. DO NOW!
Assume the price of coke is locked at $1/can, what might influence whether you buy it or not?

11. Shifting the Demand Curve!
How and why do we shift the Demand Curve?

12. RIPEN: 5 factors that Shift D
Related Goods’ price
- Substitutes and Compliments
Income (or income taxes)
Preferences: ads, seasons…
Expectations of Future Price
- P up in future means more D now!
Number of Buyers

13. Demand Increase = Shift Right!

14. Demand Decrease = Shift Left!

15. Substitutes and Compliments
- A similar or competing good
- Example: Coffee and Tea
- Price up = Demand up!
Compliment
- A good that goes with another
- example: iTunes and iPods
- Price up = Demand down

16. D-curve vs. Qd
Changing the price of the good DOES NOT SHIFT the d-curve for that good!
changing price DOES change QUANTITY DEMANDED (Qd).
* Thus, the D curve shows the Qd at every price (cheaper price = more Qd, but no shift in D curve)