Transcript ECON-1.31-2.1.12 Demand Intro

AGENDA Tues 1/31 & Wed 2/1
•Review
HW (Section Reviews)
•Chapter 2 Quiz
•QOD #8: High Priced Athletes
•Law of Demand (Graph it!)
•Demand Curves
•Diminishing Marginal Utility & Apples
•HW :Looking
for Supply & Demand Part 1
Ch 3, Section 1 Review pg 70 #1 a-j, 3, 4, 5, 7
•
Fans often complain that athletes get paid too much
money and that these higher salaries lead to higher ticket
prices.
Do you agree or disagree with this statement?
• Higher ticket prices lead to lower sales.
2. Why does this happen?
3. Why would they raise ticket prices?
1.
•
•
•
If the Lakers sell 20,000 tickets at $25 and only sell 12,000
at $30, which ticket price brings in more total revenue?
If players salaries go up from $300,000 to $325,000 per
game what price would you sell your tickets at? The
attendance numbers from above still apply.
What do you think might cause ticket prices to go up?
 demand
refers to the buying side
 supply refers to the selling side
 markets
are places where people come together to
buy and sell goods or services


good is a tangible item [product] that gives a person utility
or satisfaction


ex: swap meet, stock market, grocery store, E-Bay
Utility: something that is useful or designed for use
service is an intangible item that gives a person utility or
satisfaction
Demand-
is the willingness and ability to
purchase a good or service.


willingness to purchase refers to a person’s want or desire for a good
ability to purchase means having the money to pay for the good.
You
may want something but may not have
the ability to pay for it.
 There is no demand unless BOTH
components are there.
Law of Demand




as the price (P) of a good increases, the quantity
demanded (QD) of the good decreases
as the price of a good decreases, the quantity demanded
increases
Inverse Relationship between P and QD
Quantity Demanded (QD)


the number of units of a good purchased at a specific
price
Law of Demand
(where P = price and QD = quantity demanded
If P  then QD 
If P  then QD 
Quantity demanded
- refers
to the number of units of a good
purchased at a specific price. (It is
always a number.)
See example on pg 67
A
demand schedule a numerical chart that
illustrates the law of demand
 A demand curve is graphic representation of the
law of demand

is a graphic plotting of various price-quantity
comparisons
 The law of
diminishing marginal utility
(satisfaction) says that as a person consumes
additional units of a good that eventually the
utility (satisfaction) gained from each additional
unit of the good decreases.
 You get more utility (satisfaction) from the first
Chipotle burrito that you eat then you do from
the 2nd, 3rd, and 4th burrito that you eat.
As goods consumed increased the usefulness of that good
decreases.
Is your fifth Chipotle burrito as useful as your first?
or?
 The
more satisfaction (utility) you receive from a
unit of good the higher price you are willing to pay
for it.
 The less satisfaction (utility) you receive from a unit
of good the lower price you will pay for it.
 How much will you pay for that 1st Chipotle burrito?
 2nd? 3rd? 4th?
 caveat emptor:
let the buyer beware – the buyer has
the duty:
to make informed decisions
2. to inspect the product
3. to make payments as contracted
1.
 Buyers
have the responsibility to become informed
about the goods they buy.
 Once a buyer agrees to purchase a good, he has the
ethical responsibility to pay the seller the agreed-upon
price.
After completing your handouts…
 Create a chart and graph for your own item. Create a
value for the first item through the sixth.
 Once you’ve created your own table and chart answer
these questions:


What would have to change to make your demand of
the item change (Other than price, because price
only changes the quantity or amount)?
Write a short paragraph describing your graph and
chart. Why is the sixth item worth less than the first?
Why did you choose the values that you did? (in other
words put your graph into words).
 Section

1 Review pg 70
1 a-j, 3, 4, 5, 7
 Looking
for Supply & Demand Project Part 1