Transcript Chapter 3, Section 1

SECTION 1
Nature of Demand
Essential Question:
 Identify the two things that must happen in
order for demand to occur, explain the
difference between demand and quantity
demanded, Explain the relationship between
price and demand (LOD), Describe the
information that a demand schedule/curve
shows
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SECTION 1
Nature of Demand
Demand Vs. Quantity Demanded:
 Demand- exists when someone WANTS
and CAN AFFORD an item.
 Quantity Demanded- refers to the specific
amount of a good that demanded at each and
every price.
 The difference= QD is how much demand at
each price; demand means at least ONE
person wants/can afford
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SECTION 1
Nature of Demand
Real life Q.D. Survey:
 Copy the table on the white board to the left
 Record the quantity demanded for each of
the prices on the chart
 What do you notice happens to the Quantity
Demanded each time the price increases.
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SECTION 1
Nature of Demand
Law of demand:
 There is an Inverse (opposite) relationship
between PRICE and DEMAND
 If Price increases, Demand decreases
 If Price decreases, Demand increases
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SECTION 1
Nature of Demand
3 economic concepts explaining LoD:
 Income effect- when people have more money to
spend, they buy more. When they have less money
to spend, they buy less.
 Substitution Effect- If a cheaper alternative is
available, people usually buy it!
 Diminishing Marginal Utility- Even though a
consumer can buy something, with each additional
purchase, he/she wants it less and less.
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SECTION 1
Nature of Demand
What demand schedules and demand
curves illustrate:
 Demand schedules
 Show the quantity demanded for a product at each price
it is offered at shown in table form.
 Demand curves:
 Show the data listed in demand schedules drawn out on a
graph.
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