Transcript File
Do the vocab on the assignment in google Who’s Hungry? What’s your favorite Valentine’s Day candy? What is Demand? Defined The desire to have some good or service and the ability to pay for it Generally: When prices go down, amount demand goes up When prices go up, amount demanded goes down This concept is called the Law of Demand The Law of Demand As prices go up… Quantity demanded goes down As prices go down… Quantity demanded goes Up What are Demand Schedules & Curves? Defined A table or a graph that shows how much of a good or service a consumer is willing to purchase at a certain price Can be used for a single consumer or for an entire market Information is gathered and placed on a schedule. From the information on the schedule, a curve is created Why use schedules and curves? Clearly shows how much people will buy of a product Important for producers to know how much to make of a certain item or product Creating a Demand Schedule and curve You have found the BEST pizza place in the world How many of you would be willing to purchase a pizza at the following prices? $50 $40 $30 $20 $10 $5 What Affects Demand? Law of Diminishing Marginal Utility Defined: Examples: Cup of coffee in the morning Producers realize that consumers receive less satisfaction from each additional purchase, so the price for their good must match this level of satisfaction Income Effect Defined: Benefit of using an item or good will decrease with each additional use of the item or good The change in the amount that consumers will buy because the purchasing power of their income changes Substitution Effect Defined: When people react to a price increase by purchasing a substitute product What Affects Demand? Changes in Demand A change in the marketplace that causes consumers to buy different amounts of goods or services at every price There are six factors that affect demand Change in Demand Factor #1: Income A person’s ability to buy goods changes as his or her income changes As incomes of most consumers in a market change, so does total demand Normal goods Goods that are demanded more when consumers’ incomes rise Inferior goods Goods that are demanded less when consumers’ incomes rise Change in Demand Factor #2: Market Size As number of consumers in an area changes, so does market size Demand for most goods changes as market size changes Increase in population leads to increased demand Decrease in population leads to decreased demand Change in Demand: Market Size Change in Demand Factor #3: Consumer Tastes Consumer tastes change; products gain and lose popularity Consumers demand a greater amount of popular items at every price Sellers advertise to create demand for products Change in Demand Factor #4: Consumer Expectations Expectations about future price of items affect individual behavior expected rise or fall in price can decide whether to buy now or wait Expectations of all consumers in a market affect demand Example: because cars go on sale at end of summer, demand goes up then Change in Demand Factor #5: Substitutes Defined: Products that are used in place of each other If the price of a substitute drops, people buy it instead of original item If price of original item rises, people will buy the substitute Change in Demand Factor #6: Complements Defined: Goods that are used together Example: Peanut butter & jelly If rise in demand for one increases, then there will be a rise in demand for the other If price of one product changes, demand for both changes in same way If price of one rises, demand for both will drop Charting Changes in Demand Six Factors that Change demand 1) Income 4) Consumer Expectations 2) Market Size 5) Substitute Goods 3) Consumer Tastes 6) Complementary Goods Your Task: Find a partner Review your assigned factor that changes demand (Pgs. 86-88) Define and describe your term Find a headline/video/news clip that demonstrates this type of change in demand