1. Starter Which of the following provisions of the Constitution most clearly reflects the principle of “consent of the governed” A. Congress may exercise powers that are not specifically listed in the Constitution B. The Constitution may be interpreted through custom C. Power is dividied between the federal and state gov’t D. Voters can reject and replace representatives who serve them poorly

2. Demand

3. An Introduction to Demand  In the United States, the force of supply and demand works together to set prices  Demand is the desire, willingness, and to buy a good or service. For demand to, a consumer must want a good or service, be willing to buy it, and have the resources to buy it.  A demand schedule is a table that lists the various quantities of a product or service that someone is willing to buy over a range of possible prices.  The demand curve is the line that connects these points. The demand curve slopes downward. This shows that people are normally willing to buy less of a product at a high price and move in opposite directions.

4. Individual vs. Market Demand  Market Demand is the total demand of all consumer for a products or service. Market demand can also be shown as a schedule and demand curve.  We buy products for their utility- the pleasure, usefulness, or satisfaction they give us. They utility of a good or service is different for different people. A particular product may have no utility for some people.  The principle of diminishing marginal utility says that our additional satisfaction tends to go down as we consume more and more units

5. Change in Demand  Market demand can change when more consumers enter the market; when consumers income changes, tastes or styles change, and expectations change and when prices of related goods change.  A graph of a market demand curve can show these changes. When demand goes down, people are willing to buy fewer items at all possible prices. In this case, the curve shifts to the left. When demands goes up, the curve shifts to the right. People are willing to buy more of the item at any given price.

6. Change in Demand Continued  Competing products are called substitutes because consumers can use one in place of the other. A change in the price of one good causes the demand for its substitute to move in the same direction.  Complements are products that are used together. The demand for one moves in the opposite direction as the price of the other.

7. Elasticity of Demand  When prices rise, we know that quantity demanded will go down, but we don’t know by how much. Demand elasticity is the extent to which a change in price causes a change in the quantity demanded for a product.  For some goods and services, demand is elastic. Each change in price causes a relatively larger percentage change in quantity demanded. This is, when the price of a product changes a little, the quantity demanded change a lot.

8. Elasticity Continued  Demand for a good or service tends to be elastic if it has an attractive substitute. Demand also tends to be elastic when the purchase can be postponed.  For other goods and service, demand is inelastic. Price changes have little effect on the quantity demanded.  Demand for goods with few or no substitutes trends to be inelastic.