1. Introduction To Demand
The basic foundations to Economics!

2. Your Homework Where is your news article? What ‘news’ did you choose?
What ‘economic’ concepts did you think it covered?
How to ‘write up’ your analysis…
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3. Return of your homework…
Attainment
Effort grade
10 – 9
Significantly above standard.
Near perfect work A
Outstanding effort. Lots of time and quality work presented.
8-7
Completed in full, with a few discrepancies. B
You have put in the correct amount of time and effort
6-5
You have attempted all sections. However, you appear to have misunderstood the task. C
This is only just acceptable. You have put some time and effort, although more thought and care is needed next time.
4-3
There is work missing in what was submitted. D
This is disappointing. You can do much better than this. Make sure that you spend the correct quality time on your homework.
2-1
You have not understood the work. Significant errors or sections not attempted. U
The piece of work has to be redone!
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4. Snickers game… What happens to demand if prices increase?
What happens to demand if incomes increase?
What did the concept of Elasticity mean?
If a product has an elasticity of 0.6 what would be the change in Demand if price went up by 10%?
If a product has an elasticity of 3.5 what would be the change in Demand if price went up by 10%?
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5. What is demand?
The quantity of a product consumers are willing and able to buy at different prices in a specified time period
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6. Demand & Price relationship
Normally there is an inverse relationship between the price of good X and the quantity demanded of good X
In other words….
If the price of a good increases – people usually demand less!
If the price of a good falls – more people might buy it
…… who can resist a sale?
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7. Factors that affect demand?
Get your white board ready…
Factors that affect demand?
Spanish villa
What would make consumers buy MORE of these goods?
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8. Factors that affect demand
Consumer tastes and preferences
Income available to the consumer
Prices of other goods and services
Substitute goods
Complementary goods
Interest rates
Consumer population
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9. Different types of demand
4 types…. For you to learn!

10. What effective demand can you fulfil this weekend?
When a consumers' desire to buy a product is backed up by an ability to pay for it
Consumers must have sufficient real purchasing power
What effective demand can you fulfil this weekend?
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11. Effective demand
Demand is only effective if backed up with an ability to pay for the product
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12. So how does anyone ‘fulfil’ latent demand?
Latent demand exists when there is willingness to purchase a good, but where the consumer lacks the real purchasing power to be able to afford the product
Latent demand is affected by persuasive advertising – where the producer is seeking to influence consumer tastes and preferences
So how does anyone ‘fulfil’ latent demand?
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13. Latent demand – what are your desires?
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14. Derived demand Also known as joint demand
The demand for a product X might be strongly linked to the demand for a related product Y
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15. Bricks??????
…..no one really wants bricks…. But who would have a derived demand for them… and what are they used for?
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16. Derived demand Increase in demand for Use of cars …petrol
Leads to an increase in derived demand for…
Use of cars
…petrol
Cinema tickets
bread
New houses to be built
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17. Complementary demand
If there is an increase in demand for good X there will be more of good Y also being bought
E.g. if there is an increase in the demand for beefburgers …. There will also be an increase in demand for burger buns!
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18. Complementary demand Increase in demand for Guns??? PC printer???
Leads to an increase in complementary demand for…
Guns???
PC printer???
Mobile phones???
Bread???
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19. Income & substitution effects
Changes in price ….
Income & substitution effects

20. What happened when the price of snickers increased?
Most of you had a substitution effect!
A few of you had an income effect!
But what does this mean?
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21. Income effect
Substitution effect; price increase = you switch to cheaper alternatives
i.e. you ration spending or ‘do without.
Income effect; prices increase = you can’t afford as much therefore purchasing power is less
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22. Your tasks… On your whiteboard…. On one side write RISE
On the other write FALL
Then be prepared to decide what the effect of the following will have on demand.
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23. What if….. Price of newspaper increases…..?
What’s the
effect
on demand?
What if…..
Price of newspaper increases…..?
Substitutes products prices increase?
Incomes fall – what will be the effect on ‘normal’ goods?
The product has a major advertising campaign?
Science proves that regular mobile phone use damages memory!
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24. Individual work Complete worksheet
D:\How the market works\Worksheets\1. Demand.doc
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25. The answers…
D:\How the market works\Answers\1. Demand_A.doc
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26. Demand in the News Nigella effect sees goose fat sales soar!
Sales of digital televisions top analogue sets
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27. Homework Complete worksheet 2….
D:\How the market works\Worksheets\2. Shifts in demand.doc
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28. Plenary What type of relationship is there between price and demand?
What are the 4 different types of demand?
Effective
Latent
Complementary
Derived
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