1. Chapter 4 : Lesson 2 Factors Affecting Demand

2. Essential Question:
What factors excluding price, affect demand?

3. What kinds of things will affect the quantity demanded of any product?

4. Higher Income
Lower Price
More substitutes
Demographic
Changes
National Events

5. America’s Pastime?
Nationwide, the average number of children playing America’s once-favorite pastime has tumbled nearly 20%. Sales of everything from balls to baseball cards are falling.
Sporting Goods Manufacturers Association

6. The Next Wave?
Retailers are looking to the next big wave of consumers to drive demand. Marketers hear a demographic drumbeat: The current bulge of 27 million teens is expected to swell 10% by Companies are rushing to quantify every aspect of the adolescent lifestyle.
Wall Street Journal

8. The Income Effect What would you do with the $10? Movie Tickets
$ $ 6.00
x x
$40.00 $30.00
You are $10 “richer.”
What would you do with the $10?
Would you buy more tickets?
Would you buy popcorn and soda?
Would you save it?

9. The Income Effect The same is true in reverse.
If the price goes up, you “feel” poorer and may buy fewer tickets.
You may even be influenced by your feelings to buy less of other things as well.

10. The Substitution Effect
If an appropriate substitute is available:
Consumers tend to replace more costly items with less expensive ones.
The quantity demanded changes because of the change in the relative price of the products.

13. Six Changes in Demand
Sometimes something happens that changes the entire demand curve.
Demand may go up or down.
May be predictable.
May be unexpected.

15. 1. Change in Consumer Income
Income changes will cause a change in demand.
What happens if you get a raise?
What happens if you lose your job?
Increased demand
Decreased demand

16. 2. Changes in Consumer Tastes
Advertising
Fashion trends
New products
New technology
Consumer concerns
Environment
Health

17. 3. Changes in Substitutes
If the price of a related product changes, it may affect the demand for your product.
Butter – Margarine
High gas prices are affecting sales of SUV’s.

19. 4. Complementary Goods
Increased use of one product increases the use of the other.
Goods that are related in such a way that an increase in the price of one leads to a decrease in the demand for the other [goods that are normally consumed together] (hamburgers and French fries)

20. 5. Changes in Expectations
Announcement of new advancement in technology
World events change supply in oil.
A developer announces a new project in your area.

21. 6. Change in Number if Consumers
If population increases, demand for almost everything increases.
If population decreases, demand decreases.

22. Review Question:
Chapter 4 : Lesson 2
Read pages and answer Review Questions on page 113. Hand in Google Class Room.