Copy the definition and draw a picture that comes to mind when you see this definition Demand is the desire willingness and ability to buy a good or service demand schedule is a table that lists the various quantities of a product or service that someone is willing to buy over a ID: 732610
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Slide1
Demand
Unit 6Slide2
Opener: 10/9/17
Copy the definition and draw a picture that comes to mind when you see this definition.
Demand
is the desire, willingness, and ability to buy a good or service.
demand
schedule
is a table that lists the various quantities of a product or service that someone is willing to buy over a range of possible prices
.
utility
–the pleasure, usefulness, or satisfaction
a product gives
us. Slide3
An Introduction to Demand
In the United States, the forces of
supply
and demand work together to set
prices
. Demand is the desire, willingness, and ability to buy a good or service. For demand to exist, a consumer must want a good or service, be willing to buy it, and have the resources to buy it. A demand schedule is a table that lists the various quantities of a product or service that someone is willing to buy over a range of possible prices.Slide4
An Introduction to Demand
(cont.)
A demand schedule can be shown as points on a graph.
The graph lists
prices
on the vertical axis and quantities on the horizontal axis. Each point on the graph shows how many units of the product or service an individual will buy at a particular price. The demand curve is the line that connects these points.Slide5
An Introduction to Demand
(cont.)
The demand curve slopes
downward.
This shows that people are normally willing to buy less of a product at a high price and more at a low price. According to the law of demand, quantity demanded and price move in opposite directions.Slide6
Individual vs. Market Demand
Market demand
is the total demand of all consumers for a product or service.
Market demand can also be shown as a demand schedule and demand curve.
To illustrate, you would want to open a bicycle repair shop in an area with many bicycle riders and few repair shops. To measure demand in the area, you could check prices at other similar shops and poll consumers about their reactions to the prices.Slide7
Individual vs. Market Demand
(cont.)
We buy products for their
utility
–the pleasure, usefulness, or satisfaction they give us.
The utility of a good or service is
different
for different people.
A particular product may have no utility for some people.Slide8
Individual vs. Market Demand
(cont.)
Say you eat a slice of pizza.
Because you are most hungry when you eat the
first slice
, this slice gives you the most utility, or satisfaction.As you grow less hungry, each additional slice you eat provides less marginal utility, or less additional satisfaction. The principle of diminishing marginal utility says that our additional satisfaction tends to go down as we consume more and more units.Slide9
Individual vs. Market Demand
(cont.)
To make a buying decision, we consider whether the
satisfaction
we expect to gain is worth the money we must give up.
If the extra benefits (marginal utility) are greater than the marginal cost (extra money given up), we make the purchase. If not, we keep the money instead.Slide10
Individual vs. Market Demand
(cont.)
Because marginal utility diminishes, we would be willing to pay less for the
second
item than for the first.
Likewise, we would be willing to pay even less for the third item. This helps to explain the downward sloping demand curve.Slide11
Opener 10/10/17
Copy
the definition and draw a picture that comes to mind when you see this definition.
Market demand
is the total demand of all consumers for a product or service. diminishing marginal utility principle that says that our additional satisfaction tends to go down as we consume more and more units.law of demand, quantity demanded and price move in opposite directions.Slide12
Changes in Demand
Market demand can change when more
consumers
enter the market; when incomes, tastes, and expectations change; and when
prices
of related goods change.Slide13
Changes in Demand
(cont.)
A graph of a market demand curve can show these changes.
When demand goes
down
, people are willing to buy fewer items at all possible prices. In this case, the curve shifts to the left. When demand goes up, the curve shifts to the right. People are willing to buy more of the item at any given price.Slide14
Changes in Demand
(cont.)
Demand is related to the number of
consumers
in the area.
When more people move into an area, they buy more goods and services from local businesses. As a result, the demand curve shifts to the right. Slide15
Changes in Demand
(cont.)
When many people move away, demand for goods and services in the area
decreases
.
The demand curve shifts to the left.Slide16
Changes in Demand
(cont.)
The number of consumers in an area can change due to changes in birthrates, death rates, immigration, or migration.
Income
changes also affect demand.
When the economy is healthy, people receive raises or move to better-paying jobs. With more to spend, they are willing to buy more of a product at any particular price. In hard times, people lose their jobs. With
less
income, they
buy less
, and demand goes down.Slide17
Changes in Demand
(cont.)
Consumers’
tastes
change.
When a product is popular, the demand curve shifts to the right. When its popularity fades, demand decreases, and the curve shifts to the left. Expectations affect demand. If people believe hard times are on the way, they will buy
less.
If people expect
shortages
of something, demand
increases.Slide18
Changes in Demand
(cont.)
Competing products are called
substitutes
because consumers can use one in place of the other. A change in the price of one good causes the demand for its substitute to move in the same direction. For example, an increase in the price of margarine results in an increase in demand for butter, the substitute.Slide19
Changes in Demand
(cont.)
Complements
are products that are used together.
The demand for one moves in the
opposite direction as the price of the other.For example, when the price of DVD players decreases, the demand for complementary goods—DVDs—increases. Slide20
Elasticity of Demand
When price rises, we know that quantity demanded will go down, but we don’t know by how much.
Demand elasticity
is the extent to which a change in price causes a change in the quantity demanded for a product.Slide21
Elasticity of Demand
(cont.)
For some goods and services, demand
is
elastic
. Each change in price causes a relatively larger percentage change in quantity demanded. That is, when the price of a product changes a little, the quantity demanded changes a lot. Demand for a good or service tends to be elastic if it has an attractive substitute.
Demand also tends to be elastic when the purchase can be
postponed.Slide22
Elasticity of Demand
(cont.)
For other goods and services, demand
is
inelastic
. Price changes have little effect on the quantity demanded. Demand for goods with few or no substitutes tends to be inelastic.Slide23
Review: Up or Down?
Working in groups, move your desks together. One person in your group should get out a sheet of paper and draw an arrow on it.
You will then be presented with a scenario and asked a question based on the factors effecting demand.
Your job is determine the correct answer by displaying arrow pointing in the correct direction.Slide24
Scenario One
The price of iPods goes up, what will happen to the demand of songs on iTunes?Slide25
Scenario Two
Another company like Netflix is introduced, what will happen to demand for Netflix?Slide26
Scenario Three
It is rumored that DVD prices will go up, what will happen to demand?Slide27
Scenario Four
We are expecting a snow storm, what will happen to demand of eggs?Slide28
Scenario Five
There has been a huge stock market crash and as a result, most companies have had to make pay (if not job) cuts. What will happen to demand in the entertainment industry (things like concert sales, theme parks, etc.)?Slide29
Scenario Six
The iPhone 7s was just released but only at a limited quantity. How is demand affected?Slide30
Scenario Seven
The price of margarine falls but not of butter. What will happen to the demand of margarine?Slide31
Scenario Eight
Ford just hired 5000 new local employees, what will this do to housing demand in Oldham County?Slide32
Scenario Nine
The price of digital cameras takes a huge plunge due
to a
manufacturer who made a mistake and made too many. What will happen to the demand for photo paper?Slide33
Opener 10/6/16
Copy down the factors that affect demand
Change in Population
Change in Income
Change in expectations
Change in TasteChange in price of related goods (substitute or compliment)Slide34
Headline:
“Gas prices increase by 200% in a year”
Product:
SUV’s
Which factor affecting demand is at play? _____________________________
Will demand increase or decrease ___________________________________Draw a demand graph to demonstrate this Slide35
Headline:
“Gas prices increase by 200% in a year”
Product:
SUV’s
Which factor affecting demand is at play?
_____Change in Price of related goods___Will demand increase or decrease ______Decrease______________Draw a demand graph to demonstrate this Slide36
Headline:
“Price of fresh blueberries skyrockets ”
Product:
Strawberries
Which factor affecting demand is at play? _____________________________
Will demand increase or decrease ___________________________________Draw a demand graph to demonstrate this