1. Consumer Demand Theory Ceteris Paribus (cont’d) 10-7-2010
Econ 100 Lecture 2.2
Consumer Demand Theory
Ceteris Paribus (cont’d)

2. Overview Individual and Market Demand Curves
Factors that Shift Demand Curves
More useful websites

3. From the Demand Side First Law of Demand What Does Law Of Demand Mean?
all other factors being equal, as the price of a good or service increases, consumer demand for the good will decrease and vice versa. 

4. Changes in Demand (cont’d)

5. Factors That Can Shift Demand
Individual and Market Demand Curves
Income
Price of Substitutes
Price of Compliments
Product Quality
Future Prices
Taste and Preferences
Market Demand Curves
Population (market)

6. Market Demand: Maybe a little bit different
Market Demand may be kinked as new buyers enter at different price points
When it’s only Tom – Tom’s D is the market
Harry joins the Market
Dick joins

7. Table 4.1 Factors That Shift the Demand Curve

8. What We’ve Learned Buy rule for consumers (Qd: P=MV)
Consumers will buy x units up to the point that price equals MV for the last (xth) unit
First law of demand: demand curves are downward sloping
Negative slope  diminishing marginal value of consuming next unit

9. An In Class Problem Seattle Times Oct 3, 2007
Olympic National Park officials are suggesting raising the price of an entrance pass for motorists — good for seven days — from $15 to $25 starting in 2009, with the fee for individuals such as cyclists climbing from $5 to $12. Season passes would increase from $30 to $50
But public response, particularly from tourist-dependent local businesses has been generally negative said a spokeswoman for Olympic National Park.
Illustrate the effect of the increase of the price for park passes on the demand for trips to the park
2. Illustrate how the park fee increase would affect the demand for other tourist-related businesses, e.g., hotels, restaurants.

10. Useful Websites
Understanding differences between factors that cause shifts in demand or supply
Basics of demand and supply
Cobweb theorem