1. Demand
Demand vs. Effective Demand
Starting a business - What next?

2. Demand Market Demand Schedule - Personal Demand Schedule
Demand is measured by sales volume
Personal Demand Schedule

3. Demand Schedule for widgets in City
Price per widget
Number of widgets demanded
$ 65 10
$ 60 20
$ 55 35
$ 50 55
$ 45 80
$ 40
110
$ 35
145
$ 30
185
$ 25
230
$ 20
280
$ 15
335
$ 10
495

4. Demand Curve $ 65 $ 60 $ 55 $ 50 $ 45 $ 40 $ 35 $ 30 $ 25 $ 20 $ 15
$ 10 50
100
150
200
250
300
350
400
450
500

5. Analyzing Demand Demand Curve- graphic representation
Law of Demand – Demand varies inversely with price

6. Change in Demand Demand Curve Slopes downward Income Effect –
Substitution effect -

7. Change in Demand Shift in Demand (new demand curve)
Changes in consumer income
Consumer Tastes
Prices of related goods
Substitutes -
Complements -

8. Marginal Utility Marginal – extra Utility – satisfaction/
Function
Marginal Utility –
Principle of Diminishing Marginal Utility

9. Stretch your Demand Elasticity of Demand Elastic Demand
Inelastic Demand

10. Total Receipts Test Revenue – total receipts
Revenues Prices = Inelastic
Revenues Prices = elastic
No change in Revenue = unit elastic

11. Elastic Inelstic $ $ $3 $2 $1 1 2 3 4 $3 $2 $1 1 2 3 4 Quantity

12. Elastic or Inelastic Determinants of Elasticity
Can the purchase be delayed?
examples
Adequate substitutes?
Purchase uses large portion of income?

13. Exceptions to Law of Demand
Paradoxical Demand Curve
Personalization Fallacy
Time Period Misunderstanding
Prestige Purchases