Transcript Law of Demand

SUPPLY AND DEMAND (3.2.2)
Table of Contents
Begin
Copyright © 2013 N.S.
End Show
Table of Contents
Access Prior
Knowledge
Set Goals
New
Information
Activity
Conclusion
Demand Survey
“Law of Demand”
Targets
Definition
Changes in Demand
“Law of Demand”
Targets
Demand Can Change
In Two Ways
You Draw the Graph
Increases Demand
Decreases Demand
The Effects of
Shifting Demand
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Demand Survey
Circle the product that has been assigned to your group.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Demand Survey
Circle the product that has been assigned to your group.
Price Range
Number Who Would Pay This as the Highest Price
(Put Tallies Here)
Totals
Actual
Demand
Highest
Lowest
Prepare
Ranges
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Demand Survey
Circle the product that has been assigned to your group.
Price Range
Highest
Number Who Would Pay This as the Highest Price
(Put Tallies Here)
Totals
Actual
Demand
$6.00
$5.00
$4.00
$3.00
$2.00
Lowest
$1.00
Prepare
Ranges
Title Page
Table of Contents
Poll
Classmates
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Demand Survey
Circle the product that has been assigned to your group.
Highest
Lowest
Title Page
Price Range
Number Who Would Pay This as the Highest Price
(Put Tallies Here)
$6.00
I
$5.00
III
$4.00
II
$3.00
I
$2.00
II
$1.00
I
Prepare
Ranges
Poll
Classmates
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Totals
Actual
Demand
Fill In
This Column
Forward
Resources
End Show
Demand Survey
Circle the product that has been assigned to your group.
Highest
Lowest
Title Page
Price Range
Number Who Would Pay This as the Highest Price
(Put Tallies Here)
Totals
$6.00
I
1
$5.00
III
3
$4.00
II
2
$3.00
I
1
$2.00
II
2
$1.00
I
1
Prepare
Ranges
Poll
Classmates
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Fill In
This Column
Forward
Resources
Actual
Demand
Fill In
This Column
End Show
Demand Survey
Circle the product that has been assigned to your group.
Highest
Lowest
Price Range
Number Who Would Pay This as the Highest Price
(Put Tallies Here)
Totals
$6.00
I
1
1
$5.00
III
3
4
$4.00
II
2
6
$3.00
I
1
7
$2.00
II
2
9
$1.00
I
1
10
Prepare
Ranges
Poll
Classmates
Fill In
This Column
Actual
Demand
Fill In
This Column
Graph the Data
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Demand Survey
Price Range
Actual Demand
$6.00
1
$5.00
4
$4.00
6
$3.00
7
$2.00
9
$1.00
10
Draw the Graph
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Demand Survey
Price Range
Actual Demand
$6.00
1
$5.00
4
$4.00
6
$3.00
7
$2.00
9
$1.00
10
What relationship does your graph illustrate between “Quantity Demanded” and Price?”
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
“Law of Demand” Targets
Knowledge
Understand the relationship between price and quantity
demanded.
Reasoning
Explain why demand curves might shift.
Skill
Draw shifts in demand curves.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Definition
If all things are equal, consumers will demand more of a product as its price
decreases, and less of a product as its price increases.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Definition
If all things are equal, consumers will demand more of a product as its price
decreases, and less of a product as its price increases.
1) Lower prices are
an incentive for
consumers.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Definition
If all things are equal, consumers will demand more of a product as its price
decreases, and less of a product as its price increases.
1) Lower prices are
an incentive for
consumers.
2) Higher prices for
the same item will
deter consumers.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Demand Can Change in Two Ways
1) Change in “Quantity Demanded”
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Demand Can Change in Two Ways
1) Change in “Quantity Demanded”
• This is just a change along the
demand curve.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Demand Can Change in Two Ways
1) Change in “Quantity Demanded”
• This is just a change along the
demand curve.
For example, the price for lemonade
might change from $2.00 to $1.00
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Demand Can Change in Two Ways
1) Change in “Quantity Demanded”
• This is just a change along the
demand curve.
• Notice how the blue demand line did
not move. Just price changed, so we
moved from one “quantity” to another.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Demand Can Change in Two Ways
1) Change in “Quantity Demanded”
• This is just a change along the
demand curve.
• Notice how the blue demand line did
not move. Just price changed, so we
moved from one “quantity” to another.
2) Change in “Demand”
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Demand Can Change in Two Ways
1) Change in “Quantity Demanded”
• This is just a change along the
demand curve.
• Notice how the blue demand line did
not move. Just price changed, so we
moved from one “quantity” to another.
2) Change in “Demand”
• This is a shift of the entire demand
curve either “left” or “right.”
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Demand Can Change in Two Ways
1) Change in “Quantity Demanded”
• This is just a change along the
demand curve.
• Notice how the blue demand line did
not move. Just price changed, so we
moved from one “quantity” to another.
2) Change in “Demand”
• This is a shift of the entire demand
curve either “left” or “right.”
For example, this might be a really
hot day, so more people want lemonade
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Demand Can Change in Two Ways
1) Change in “Quantity Demanded”
• This is just a change along the
demand curve.
• Notice how the blue demand line did
not move. Just price changed, so we
moved from one “quantity” to another.
2) Change in “Demand”
• This is a shift of the entire demand
curve either “left” or “right.”
• Notice how the new blue demand
line shows that more lemonade will be
demanded at every price.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
D2
Forward
Resources
End Show
You Draw the Graph
On your notes there is a graph labeled
“Increase in Demand.” Draw an increase in
demand on that graph.
Increase in Demand
Draw This Graph
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
You Draw the Graph
On your notes there is a graph labeled
“Increase in Demand.” Draw an increase in
demand on that graph.
Increase in Demand
D2
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
You Draw the Graph
On your notes there is a graph labeled
“Increase in Demand.” Draw an increase in
demand on that graph.
On your notes there is a graph labeled
“Decrease in Demand.” Draw a decrease in
demand on that graph.
Increase in Demand
Decrease in Demand
D2
Draw This Graph
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
You Draw the Graph
On your notes there is a graph labeled
“Increase in Demand.” Draw an increase in
demand on that graph.
On your notes there is a graph labeled
“Decrease in Demand.” Draw a decrease in
demand on that graph.
Increase in Demand
Decrease in Demand
D2
D2
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Increases Demand
There are six factors that will cause demand to increase.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Increases Demand
There are six factors that will cause demand to increase.
1) Consumers enter the market
Examples include an increase in the birth
rate, an influx of immigrants, or students
arriving in a college town.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Increases Demand
There are six factors that will cause demand to increase.
1) Consumers enter the market
2) Consumers have more money
Whenever people have more money (raise,
tax refund, etc.), they are willing and able to
spend it on more things.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Increases Demand
There are six factors that will cause demand to increase.
1) Consumers enter the market
2) Consumers have more money
3) Consumers expect good things
to happen in the future
If consumers think they will have more money
in the future or that the economy will grow
(along with prices), they will purchase now.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Increases Demand
There are six factors that will cause demand to increase.
1) Consumers enter the market
2) Consumers have more money
3) Consumers expect good things
to happen in the future
4) Product is a fad (popular)
Items may become more popular due to a
shift in tastes. This may happen because of
fads, beliefs, culture, or advertising.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Increases Demand
There are six factors that will cause demand to increase.
1) Consumers enter the market
2) Consumers have more money
3) Consumers expect good things
to happen in the future
4) Product is a fad (popular)
5) Price of a substitute good
increases
Title Page
Table of Contents
Back
If an item that serves a similar function
(substitute) becomes expensive, consumers
will demand more of the original item.
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Increases Demand
There are six factors that will cause demand to increase.
1) Consumers enter the market
2) Consumers have more money
3) Consumers expect good things
to happen in the future
4) Product is a fad (popular)
5) Price of a substitute good
increases
6) Price of a complementary good
decreases
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
When goods are consumed together
(complements), a decrease in the price of one
makes both more appealing.
Forward
Resources
End Show
Decreases Demand
There are six factors that will cause demand to decrease.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Decreases Demand
There are six factors that will cause demand to decrease.
1) Consumers leave the market
Examples include a decrease in the birth rate,
people moving away, or students leaving a
college town for the summer.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Decreases Demand
There are six factors that will cause demand to decrease.
1) Consumers leave the market
2) Consumers have less money
Consumers will obviously not be able to buy
as much if less money is available. This can
be caused by unemployment, taxes, etc.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Decreases Demand
There are six factors that will cause demand to decrease.
1) Consumers leave the market
2) Consumers have less money
3) Consumers expect bad things to
happen in the future
If consumers think they will have less money
in the future or that the economy will shrink
(along with prices), they will purchase later.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Decreases Demand
There are six factors that will cause demand to decrease.
1) Consumers leave the market
2) Consumers have less money
3) Consumers expect bad things to
happen in the future
4) Product goes out of style
Items may become less popular due to a shift
in tastes. Products that were once in style
may suddenly become out of favor.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Decreases Demand
There are six factors that will cause demand to decrease.
1) Consumers leave the market
2) Consumers have less money
3) Consumers expect bad things to
happen in the future
4) Product goes out of style
5) Price of a substitute good
decreases
Title Page
Table of Contents
Back
If an item that serves a similar function
(substitute) becomes inexpensive, consumers
will switch their demand to the substitute.
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Decreases Demand
There are six factors that will cause demand to decrease.
1) Consumers leave the market
2) Consumers have less money
3) Consumers expect bad things to
happen in the future
4) Product goes out of style
5) Price of a substitute good
decreases
6) Price of a complementary good
increases
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
When goods are consumed together
(complements), an increase in the price of
one makes both less appealing.
Forward
Resources
End Show
The Effects of Shifting Demand
When the demand curve shifts, it affects quantity and price. Complete the
table (on your notes) by deciding whether quantity and price increase or
decrease for each scenario. Use the graphs to help you.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
The Effects of Shifting Demand
When the demand curve shifts, it affects quantity and price. Complete the
table (on your notes) by deciding whether quantity and price increase or
decrease for each scenario. Use the graphs to help you.
Effect on Quantity
Effect on Price
Increase in Demand
Show
Answers
Decrease in Demand
Draw the Graphs
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
The Effects of Shifting Demand
When the demand curve shifts, it affects quantity and price. Complete the
table (on your notes) by deciding whether quantity and price increase or
decrease for each scenario. Use the graphs to help you.
Effect on Quantity
Effect on Price
Increase in Demand
Show
Answers
Decrease in Demand
Increase in Demand
Decrease in Demand
D2
D2
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
The Effects of Shifting Demand
When the demand curve shifts, it affects quantity and price. Complete the
table (on your notes) by deciding whether quantity and price increase or
decrease for each scenario. Use the graphs to help you.
Increase in Demand
Decrease in Demand
Effect on Quantity
Effect on Price
Increases ()
Decreases ()
Increases ()
Decreases ()
Increase in Demand
Decrease in Demand
D2
D2
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Changes in Demand
DIRECTIONS
On the front side, fictional newspaper headlines illustrate the market for
butter. Determine if the quantity demanded changed (which means only the
price of butter has changed), or if the entire demand has changed. If only
quantity demanded changed, circle “No Change.” If the entire demand has
changed, identify if it was an increase or a decrease, and identify which
determinant of demand is responsible. The determinants of demand are
listed in the box. On the back side, you will graph these changes.
GRAPH CHANGES IN DEMAND
For each of the headlines listed on the front side, draw the appropriate
change in demand on the graph. Remember, an Increase means the line
moves to the right, a Decrease means the line moves to the left, and No
Change means the line stays the same.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
“Law of Demand” Targets
Knowledge
Understand the relationship between price and quantity
demanded.
Reasoning
Explain why demand curves might shift.
Skill
Draw shifts in demand curves.
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show
Resources
Title Page
Table of Contents
Back
Last Slide
Viewed
Copyright © 2012 N.S.
Forward
Resources
End Show