2. Section 1- What is Demand?  Demand- The desire to have some good or service and the ability to pay for it.  If you cannot afford something, technically, you have no demand for it.

3. Law of Demand  - states when the price of a good or service falls, consumer buy more of it.  - when the price rises, consumers buy less of a product.

4.  - Can you give me an example of a product in your life in which price may have affected by the law of demand?

5. Demand Schedules  - A table that shows how much of a good or service an individual consumer is willing and able to purchase at each price in the market

6. Pizza demand schedule Quantity DemandedPrice 020 118 216 314 412 510 68 76 84

7. Market Demand Schedule  Shows how much of a good or service all customers are willing and able to buy at each price in a market. Energy Drink Market Demand Schedule Price per Energy DrinkQuantity Demanded 26 35 53 62

8. Demand Curves  - A demand curve is a graph that shows how much of a good or service that an individual will buy at each price.  - It displays data from a demand schedule.

9. Pizza Demand Curve

10. Market Demand Curve  - Shows the data found in a market demand schedule.  - Shows the quantity that all consumers or the market as a whole are willing to buy at each price.

11. Energy Drink Market Demand Curve

13.  The demand curves used in yesterday’s examples rested on the assumption that all other economic factors would remain the same.

14. Law of Diminishing Marginal Utility  -states that the benefit of using each additional unit of a product over a given time will decline.  - Review: What is Utility?

15. Income Effect  A change in the amount of a product that a consumer will buy because the purchasing power of his income changes.

16. Substituion Effect  Pattern in which consumers react to the change in the price of a good or service by buying a substitute product.  - ex: buying magazines b/c. the price of books goes up

17. Change in Quantity Demanded  - The change in the amount of product people buy due to a change in price.  Seen as a movement along the demand curve.

18. Change in Demand  - Change in demand occurs when a change in the marketplace such as high unemployment prompts consumers to buy different amounts of a good or service at every price.  also called a shift in demand b/c. it actually shifts the demand curve

19. Factors that Cause A Change in Demand 1. Income -if income changes, for higher or lower, one’s ability to buy goods and services changes -2.Market Size - If the amt. of consumers increases or decreases, the market also changes. ex: tourists, population shifts 3. Consumer Tastes - when a product loses popularity, consumers demand less of it, and vice versa

20.  4. Consumer Expectations  If you think the price of something will change, that can determine when you buy it 5. Substitute Goods 6. Complementary Goods - are goods that are used together, so a rise in demand leads to a rise in demand for the other. - price for both changes in the same way ex: milk and cereal

21. Section 3- Elasticity of Demand

22.  - Elasticity of demand describes how responsive consumer are to price changes in the marketplace  Demand is elastic when a changed in price leads to a large change in the quantity demanded  Inelastic demand, or inelasticity, is the opposite

23. What Determines Elasticity?  1. Substitute goods or services  If there is no substitute for a good or service, its demand tends to be inelastic  2. Proportion of Income  Demand for products that cost a small porportion of one’s income tend to be inelastic 3. Necessities vs. Luxuries - demand for necessities is inelastic - people will pay what they need to

25. Total Revenue  Total Revenue = PxQ  P= Price  Q= Quantity