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DEMAND- your willingness and ability to buy something Quantity Demanded: the amount of a g/s that a consumer is willing and able to buy at each.

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Presentation on theme: "DEMAND- your willingness and ability to buy something Quantity Demanded: the amount of a g/s that a consumer is willing and able to buy at each."— Presentation transcript:

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3 DEMAND- your willingness and ability to buy something
Quantity Demanded: the amount of a g/s that a consumer is willing and able to buy at each particular price (or a specific price)

4 DEMAND Quantity Demanded P P Specific Price Various Possible Prices D D Qd Qd

5 The Law of Demand (an inverse relationship of Price and Quantity Demanded)
P, Qd (an increase in price causes a decrease in quantity demanded) (a decrease in price causes an increase in quantity demanded)

6 Price P3 P2 P1 QD3 QD2 QD1 Quantity

7 Determinants of Demand

8 What about when price isn’t involved?
What makes the graph get up and move?!

9 Activator

10 I’m so hungry!

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12 Skinny jeans and bell bottoms
I love skinny jeans!

13 Pay cut at work McDonalds for dinner? Fancy Restaurant?

14 Sale this Friday, what happens to your demand today?

15 I ncome N umber of consumers S ubstitute goods E Expectations (future) C omplementary goods T aste and Preferences

16 Do demand and supply graphs stay
the same or do they change?

17 Answer: They Change! But why?

18 Lots of things can change a supply or demand graph
Prices for the goods and services can change This causes the quantity demand and quantity supplied to change so we move ALONG the curve to a new point

19 What would cause the whole curve to move?
All new quantities at the same prices?

20 Answer: any change other than the price of the good or service!

21 These influences are called Determinants of Demand

22 1. Number of consumers More consumers = more demand no matter what price is charged Less consumers = less demand no matter hat price is charged

23 2. Taste and Preferences If something becomes popular, demand goes up no matter what price is charged If something is no longer popular, demand goes down no matter what price is charged

24 Tastes and Preferences
Trends change demand Ex. Boy Bands D2 D2 D1 D1 D3 Late 90s Today

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28 Other Scenarios… Britney Spears Ricky Martin…Livin’ La Vida Loca???

29 3. Income Income rises = demand increases no matter what price is charged Income falls = demand falls no matter what price is charged

30 4. Price of substitute goods
Substitute good – something you buy instead of something else If the price of the substitute good falls, demand for the regular good falls Example if ketchup goes on sale, demand for mustard will fall (mustard price has not changed) If the price of the substitute good rises, demand for the regular good increases Example if ketchup goes up in price, demand for mustard will increase (mustard price has not changed)

31 Jeans are too much! Switch to Khakis! P2 P1 D2 D1 Qd2 Qd1 Khakis Jeans

32 5. Price of complementary goods
Complementary goods – two or more goods you buy together If the price of a complementary good increases, the quantity demand of that good will fall AND the demand for the regular good will decrease (it’s price does not change) Ex. If peanut butter goes up in price, QD of peanut butter falls AND demand for jelly falls

33 5. Complementary Goods Goods commonly used with other goods
Kool-Aid and sugar As the price of Kool-Aid falls, the demand for sugar increases

34 6. Future Price Expectations
Future price expectations – what you expect prices to do in the future If you expect prices to FALL in the future you will wait to buy it so demand will DECREASE right now (even though prices don’t change now) If you expect prices to RISE in the future you will buy it now so demand will INCREASE right now (even though prices don’t change now)

35 Curve Shifts Increases in demand mean the curve will move to the right
Decreases in demand mean the curve will move to the left

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