1. Demand Standards SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits work to determine production and distribution in a market economy. a. Define the Law of Supply and the Law of Demand. SSEMI3 The student will explain how markets, prices, and competition influence economic behavior. a. Identify and illustrate on a graph factors that cause changes in market supply and demand.

2. Demand Microeconomics - Economics is divided into 2 branches - Economics is divided into 2 branches Microeconomics & Macroeconomics Microeconomics & Macroeconomics Micro – small picture – behavior and decision making by small units – businesses and individuals Macro – big picture – the economy as a whole – decision making by large units – the gov’t

3. Demand  Demand is the desire, willingness, and ability to buy a good or service A customer has to want a good or service and have the money to buy it A customer has to want a good or service and have the money to buy it  The Law of Demand: As the price goes up, qty. demanded goes down; as the price goes down, qty. demanded goes up.  There is an INVERSE relationship between price and quantity demanded

4. INVERSE Relationship  There is an INVERSE relationship between price and quantity demanded  P QD

5. Demand Schedule  A table that lists the various quantities people are willing to buy over a range of prices  Example: Demand Schedule for DVDs PriceQuantity $500 $401 $302 $203 $105 $58

6. Demand Schedule ___________ PriceQtyTotal Qty

7. Demand Curve for “A”

8. Demand Curve – graphs demand schedule  Here’s what it looks like:  Demand always slopes Down – because as the price goes up consumers buy less of it.  Price goes on the Y axis (vertical)  Quantity goes on the X axis (horizontal) PRICE QUANTITY Demand

9. Change in Quantity Demanded  If the price of a good changes, movement will occur along the existing demand curve.  A change in price causes a change in Quantity Demanded (QD) PRICE QUANTITY Demand P1 Q1 P2 Q2

10. Demand Schedule/Curve Practice - Demand Curve for Gasoline in the city of Wysocki Price (per gallon) Quantity (gallons per week) $3.70 60,000 60,000 $3.50 70,000 70,000 $3.40 80,000 80,000 $3.00 90,000 90,000 $2.80100,000

11. Individual v. Market Demand  Aggregate Demand is market demand – the total demand of all consumers for their product or service  Would companies want to look at individual or aggregate demand when deciding how much of their product to produce?

12. Create a Demand Schedule and Graph Pick a product that you would buy  Requirements:  Make a Demand Schedule first.  Then graph the demand schedule.  Needs a Title (Tyler’s Demand for ______)  Make a Demand Schedule first (need 5 price levels)  Graph the Demand Schedule – Label Price and Quantity, Connect points, Need Equal increments on graph (example - by 5’s, 10’s, 25, etc.)

13.  Think of a situation that would cause Demand to increase. List the reason and show this on the graph. Label it D2  Think of a situation that would cause Demand to decrease. List the reason and show this on the graph. Label it D3