Transcript Demand

Demand
Demand is the quantity of a
commodity a consumer is willing
and able to buy.
The law of demand
As the price increases, the quantity
demanded decreases, ceteris paribus.
This also works in the opposite direction
e.g. Price down quantity up
Ceteris paribus means everything
else is held constant and only price is
allowed to change. We know in reality you
can’t do this but just pretend.
Demand Schedules
This is a table that shows the quantity of a
good or service a consumer is willing and
able to buy at each price
TITLE: Lillie’s Demand for chips
per week
Label: Price ($) Label: Quantity
1
5
2
3
3
2
4
1
Lilly's Demand for Chips
6
Price ($)
5
4
3
2
1
0
1
2
3
Quantity
4
TALL
Title
Axis
Labels
Line
TALL helps us remember the key points to
draw an accurate line graph.
Change in the Quantity Demanded
Price is the only thing that will change the
quantity demanded.
A change in price moves you along the Demand
curve.
An increase in price causes a decrease in the
Quantity demanded
An decrease in price causes an increase in
Quantity demanded
Price and quantity move in opposite directions
LAW OF DEMAND
As price decreases then
quantity demanded
increases or as price
increases quantity
demanded decreases,
ceteris paribus.
P
$
D
Q
Do this now
D
D
1. Construct a demand schedule based on the information
above. Remember your labels
2. Identify the quantity Rena would demand at the current
price of $1.00.
3. Explain why Rena’s quantity demanded of peanut slabs
falls as the price rises
Movement along the demand
curve
We use the term quantity demanded when we are describing a change in
price. This is illustrated by a movement along the demand curve.
Price increases to
1.25
Show these effects
p2
p1
Locate new
quantities and prices
Q2
Q1
Draw in arrows
Label.
Go to workbooks page 28. Read the box up the top and begin
exercises below.
Market Demand
Is the total demand that all individual
consumers in that market are willing and
able to buy at various prices at a particular
point in time
How much the whole market will buy
Market Demand Schedules and
Curves
Found (derived) by adding horizontally, all the
individual consumers demand schedules and
curves.
Demand Schedule for Cans of Soft Drink (weekly)
Price ($)
Rebecca
Quantity
Hilary
Quantity
Maree
Quantity
Market
Quantity
.50
7
4
6
1.00
4
3
3
4+3+3=10
1.50
2
1
2
2+1+2=5
7+4+6 =17
Text Book page 24
Questions 1-5