1. Demand

2. Demand and Supply Why do roses cost more on Valentine’s Day?
Why do TV ads cost more during the Super Bowl ($ million for 30 sec.) than during Nick at Nite reruns?
Why do hotel rooms in Sun Valley, Idaho cost more in the winter than in the summer?
Why do surgeons earn more than butchers?
Why do pro basketball players earn more than pro hockey players?
Why do economics majors earn more than most other majors?
Why are some of you going to major in economics in college?
The answer to these and other economics questions boil down to the workings of supply and demand – the subject of this chapter.
“Econ, Econ”

3. Individual Demand Market Demand To “JO” “Mo” “Bo” + = + D D D D2 D 261
[Total] $3 + $3 + = $3 $3 $2 $2 $2 $2 35 40 26 39 45 30
100
115
115
From “individual” demand to “market” demand
And, what if the price of this product decreases from $3 to $2?
A point to point movement on the same “D” curve is a “Change in QD”
And – what if this good prevents cancer, so we have an increase in “D” for it.

4. QD – how much will be purchased at a specific price [& date].
DEMAND SCHEDULE
Consumers “willingness to buy”
Price decreases; QD increases D P QD $5 $4 $3 $2 $1 $5 4 3 2 1 10 20 35 55 80
Quantity Demanded
…a specified time period
…other things being equal
QD – how much will be purchased at a specific price [& date].

5. Law of Demand [Change in QD]
Reasons For Downsloping “D” Curve
1. Income Effect –current buyers buy more.
2. Substitution Effect– new buyers now purchase.
3. Diminishing Marginal Utility - because buyers
of successive units receive less marginal utility,
they will buy more only when the price is lowered.
iPhone
[8GB]
$399.00
[with 2 yr contract]
Change in QD
1. Price change
2. Movement
[up/down the demand curve]
3. Point to point [along the curve]
Price QD
$250.00
Inverse relationship
QD1
QD2
“D” refers to the “whole curve”. [“all prices”]
“QD” refers to a “point on the curve”
based on a “particular price.”

6. Three Reasons Why the Law of Demand ExistsP1
Income Effect
When things are expensive, money buys less
When things are cheap, money buys more
Substitution Effect
When apples are expensive and their
substitutes (pears) are relatively cheap,
I buy fewer apples and more pears
Diminishing Marginal Utility
Each additional unit of an item purchased gives less marginal utility (happy points) than the previous unit. Therefore, the only way I will buy more is if the price is lower.
Ex. When I’m hungry, I typically will buy 2 breakfast tacos. The reason I don’t buy a third taco is because the marginal utility of the third taco is less than the price of the taco. But, if the price of the taco is less than the marginal utility of the taco, then I will buy the third taco P2
QD1
QD1

7. Demand is a whole bunch of QDs strung together.
Demand [curve]
Demand Can Increase or Decrease
“Change in Demand (curve)” [“TIMER] 6 5 4 3 2 1 P
Demand Schedule D2 D1
Individual Demand D3 P Qd
Increase in Demand $5 4 3 2 1 10 20 35 55 80
Price (per bushel)
Decrease in Demand Q
Quantity Demanded (bushels per week)
Demand is a whole bunch of QDs strung together.

8. Graphing The Demand Curve [Price Change, Point to Point Movement]
Picture of
Law of
Demand

9. Elastic or Inelastic (Total Receipts Test)$2 $1
Elastic
Inelastic
Total Receipts Test
20 x $2 = $40.00
Total Receipts Test
20 x $2 = $40
50 x $1 = $50
30 x $1 = $30.00

10. Elastic (flexible) Demand Substitutes (butter) Luxury (mink coat)
11. Elasticity of D – the way price affects QD. 12. Elastic - QD that is very responsive to price. 13. Inelastic - a chg in price has little impact on QD.
Elastic (flexible) Demand
Substitutes (butter)
Luxury (mink coat)
Expensive (car)
Has durability (refrigerator)
Lasts a long time (gas-guzzling car)
Inelastic (inflexible) Demand
No substitutes (milk)
Necessity (insulin)
Inexpensive (safety pin)
No durability (pencil)
Lasts only a short time (bread)

11. Think of “responsiveness” as “flatness”.
Elastic Demand For Cassette Tapes .
“TR” Test
$2.50x100,000=$250,000
$1.50x600,000=$900,000
+$650,000 D
-$1
Think of “responsiveness” as “flatness”.

12. D
“TR” Test
$2 = $30 bil.
$1 = $20 bil.
-$10 bil.
-$1
+25% QD

13. 16 oz. Orange juice = 220 calories 16 oz. Tomato juice = 78 calories
Change in “Demand” [curve] [“TIMER”] .
Consumers change
their minds at each
and every price.
Based on good or bad
publicity about OJ.
16 oz. Orange juice = 220 calories
16 oz. Tomato juice = 78 calories

14. Quantity Demanded vs. Demand
Quantity Demanded [QD] is triggered by a price chg.
The quantities of a good or service that people will purchase at a specific price at a given time.
Demand [D] is triggered by “TIMER” [non-price].
A schedule of the total quantities of a good or service that purchasers will buy at different prices at a given time.
Demand is a bunch of QD’s strung together.

15. P D3 D1 D2 P P Bread Butter Bagels D D1 D2 D1 P1 P2
“Demand Shifters” [TIMER]
1. Taste [direct]
2. Income [normal-direct] [inferior-inverse]
3. Market Size [number of consumers-direct]
4. Expectations [of consumers about future *price-direct,
about future availability-inverse, or about future income–direct.
5. Related Good *Prices [substitutes-direct] [complements-inverse] D1 D2 D D1 D1 P1 D3 D2 D2 P P2 P P
Complement
[inverse]
QD1
QD2
Substitute
[Direct]
Bread
Butter
Bagels
Change in “D” [curve]
1. Non price change [“TIMER”]
2. Whole “D” curve shifts
[There is a change in “QD” but it is
not caused by a change in “price.”
[QD-”single price”; D-”all prices”]
QD3
QD1
QD2

16. Change in “Taste” D1 D2 D3 P QD3 QD2
Mini
Skirts
Hip Huggers
Bell Bottoms
QD3
QD1
QD2
Platforms
1. An “Increase in Taste” shifts the D curve right
a. The Nehru jacket came & went in 6 months.
b. Jordache jean demand created by TV
c. Leisure suits and bell bottoms.
d. Technological change may cause
consumer taste to change[slide rules].

17. 1. "Change in Taste" for Dark Chocolate
Increase in demand for dark chocolate after studies
revealed that there were health benefits from eating it.
Scientists have discovered that smokers who ate dark chocolate had
less hardening of the arteries and a lowered risk of blood clots. D2 D1 P

18. Advertising Can Shift “D” [& also impact QD]
$45
QD1
QD2

19. [Normal-Direct; Inferior-Inverse]
2. Change in Income
[Normal-Direct; Inferior-Inverse]
Spam
Steak D2 D1
Less income
results in
more demand
for spam;
less demand
for steak.
More income
results in
more demand
for steak;
less demand
for spam. P
QD1
QD2

20. Income 2. Change in Income Spam Steak Demand For Demand
Normal Good – goods whose demand
varies directly with income.
Inferior Good – goods whose demand
varies inversely with income.
Butter, filet, steel-belts, new clothing & new cars v.
Margarine, spam, used tires, old clothing & old cars
Demand
For
Steak
Income
Demand
For
Spam

21. 3. Change in Market Size [Direct]
[Number of Consumers] D2 D1 P
More demand
for both spam
and steak.
QD1
QD2

22. 3. Market Size (direct) (# of consumers) Increase in # of consumers
can increase/decrease from
economic decisions, advertising, and
government political decisions (China).
Ex: The large “baby boom” of
increased the demand for baby supplies.
An increase in life expectancy increased
demand for for medical care, retirement
communities, and nursing homes.
Increase in # of consumers

23. P 4. Expectations [of consumers]
[about future price, availibility, & income]
If the iPod-Touch is expected to
increase in price from $299 to $399. D2 D1
iPod-Touch P
QD1
QD2

24. 4. Consumer Expectations
car
Consumer expectations about future product
price, future availability, & future income.
Ex: When the Korean War broke out in the
summer of 1950, new car sales boomed (also
washers and refrigerators) out of the
expectation of a production stoppage like
during WWII. None occurred but it was the
expectation that affected new car demand.

25. 5. Prices of Related Goods [Substitues-Direct; Complements-Inverse]
QD1
QD2
Substitute
[Direct]
Gangsta Grills
Chrysler 300s
Toyotas
MV X PQ

26. 5. Prices of Related Goods Cereal & milk Coffee & donuts
There are three types of goods.
Independent goods – price change
of one has no impact on the other.
Ex: fishhooks & pantyhose or salt & shoelaces
2. Substitute goods(“competing goods”)
- price change of one affects the
demand of the other directly.
Ex: 7Up & Coke or Miller & Bud
3. Complementary goods(“go together”)
demand for the other inversely.
5. Prices of Related Goods D1 D2
QD2 QD1
Peanut butter & jelly D2 D1
Camera
QD1 QD2
Film
Cereal & milk Coffee & donuts

27. [Increase in price of one; increase in “D” of the other]
Substitutes - Direct
Demand
for
Dr Pepper
Price Of
7UP D1 D2 D P P2 P1
QD QD
QD2 QD1

28. Complements - Inverse Car Prices Gasoline Demand P D2 D1
[Decrease in price of one; increase in the “D” for the other]
Complements - Inverse P1 P2
QD1 QD2 D1 D2
Car Prices P
QD QD
Gasoline Demand
No change
in price
I’m making more money without dropping my prices.
They are so cheap that
even dogs are buying cars

29. [Increase in price of one; increase in “D” of the other]
Substitutes – Direct
[Increase in price of one; increase in “D” of the other]
Demand for
Microsoft’s Zune D2
Price of
iPod Video D1 D P P2 P1
QD QD
QD2 QD1
1977, Bill was
arrested for
running a stop
sign and driving
without a license.

30. Substitutes - Direct Turkey Chicken
Demand
for
Turkey
Price Of
Chicken D1 D2

31. Prices of Related Goods
Although both monitor & laptop QDs changed, it is still
a “Change in D” for those two, because the QD changes
were not triggered by a change in price.
The price of desktop computers did change so there is a
“Change in QD” for desktop computers. D1 D2 D D1 P1 D2 P P2 P
Complement
[inverse]
QD1
QD2
Substitute
[Direct]
Desktop
Computers
Monitor
Laptops
Prices of Related Goods

32. Substitutes - Direct Windows
Price Of
Windows
Computers
Demand
for
Apple
Computers D1 D2

33. Substitute/Complement Relationships. D
“Substitutes” D1 D2 P1 P
Price
Decreases
Price
Decreases P2
QD2 QD1
QD1 QD2
[DIRECT]
Hamburgers
Hot Dogs
“Complements” D D1 D2
Price
Decreases
Demand
Increases P1 P P2
QD1 QD2
QD1 QD2
[inverse]
Syrup
Pancakes

34. “TIMER” P Tastes [direct] Incomes -Normal [direct] & Inferior[inverse]
Market Size(# of consumers) [direct]
Expectations of consumers about
[future price-direct; future
income [direct]; and availability [inverse]
Related Good Price Changes
[substitutes-direct; complements-inverse]
Helmets

35. Change in QD [“Change in “price”]
Increase in “QD”
[caused by a “decrease in price”]
Decrease in “QD”
[caused by an “increase in price”] D D
1. Price change
2. Movement
3. Point to point
[“Snap shot of 1 pt in time] P1 P2 P2 P1
QD1
QD2
QD2
QD1
Change in “D” [“TIMER”] D2 D1 D1
1. Non-price
2. Whole curve
3. Shift
[“Time passes”] D2 P P
“Increase in D”
“Decrease in D”
What could cause an “increase in Demand?” Expectations of a shortage
1. Increase in taste Expectations of a price increase
2 .Increase in income [normal good] Expectations of positive future income
3. Decrease in income [inferior good] Incr in price of a substitute for product “X”
4. Increase in market size [# of consumers] Decr in price of a complement of product “X”

36. [price change/movement/pt to pt] “Shifting the crab demand curve”
Change in D [curve]
[non-price change/shift/whole curve]
5 Demand Shifters [“TIMER”]
1. Taste [direct]
2. Income [normal - direct] [inferior - inverse]
3. Market Size [number of consumers - direct]
4. Expectations [price, income, & availability]
5. Related Good Price changes
[substitutes - direct] [complements - inverse]
Change in QD
[price change/movement/pt to pt] D1 D2 D D3 P1 P2
QD3 QD1 QD2
QD1 QD2
[“Moving” along the crab demand curve”
because of a crab price change]
“Shifting the crab demand curve”
+/- QD/D
___ ___ 1. Crab sales are affected by a drop in crab prices.
___ ___ 2. An increase in income causes the demand curve for crab to shift. + QD + D

37. Graph The Black Boldfaced Items
+/- D/QD
Graph The Black Boldfaced Items
___ ___ 1. A population increase affects sales of Pepsi Colas.
___ ___ 2. Consumer incomes in the city of Plano decrease,
with the result that jewelry sales are affected.
___ ___ 3. A camera store has a sale that features 25% off the price of all cameras.
___ ___ 4. Texas imposes a 15% luxury tax on the sale of sailboats.
___ ___ 5. A frost in Florida destroys 60% of the orange crop and increases
expectations about a future price increase of oranges.
___ ___ 6. Consumers expect the prices of digital cameras to decrease next month.
___ ___ 7. The sale of DVDs is affected by a 20% increase in the price of DVD players.
___ ___ 8. The sale of buns is affected by a 20% decrease in the price of
hamburger meat.
___ ___ 9. The sale of Kangaroo meat in Europe [Roo Steak] is affected
by a 25% increase in the price of beef.
___ ___ 10. Dunkin Donuts lowers the price of donuts & experiences a change in sales. + D - D + QD - QD + D - D - D D D1 P2 P1
DVD
Players
[Complements - INVERSE] + D
QD2 QD1
DVDs D D1
[Complements - INVERSE] P1 P2
Hamburger
meat +
Buns D
QD1 QD2 D D1 P2 P1
[Substitutes - DIRECT]
Beef +
QD QD1
Kangaroo meat QD

38. What is not held constant
Change in QD D
Change in QD
Price Change
Point to Point
Movement P1 P2
QD1 QD2 D
[INVERSE] P2 P1
What is not held constant
in these two graphs?
Price
QD QD1
“Change in Demand” D1 D1 D2 D2 P P
Do not confuse these
two with “Chg in QD”
Q1 Q2
Q2 Q1
Change in Demand
Non-Price Change
Whole Curve
Shift

39. [D – “TIMER; QD – price change [inverse]
__1. Which will cause an “Increase in D” for MP3 Player phones?
a. increase in income c. increase in the price of MP3 Player phones
b. decrease in income d. decrease in the price of MP3 Player phones
___2. Which will cause an “Increase in QD” for MP3 Player phones?
a. decrease in income c. decrease in the price of MP3 Player phones
b. increase in income d. increase in the price of MP3 Player phones
___3. Which will cause a “Decrease in D” for Projectors?
a. increase in the price of projectors c. decrease in # of consumers
b. decrease in the price of projectors d. increase in projector taste
___4. Which will cause a “Decrease in QD” for Projectors?
a. increase in the price of projectors c. decrease in # of consumers
b. decrease in the price of projectors d. increase in projector taste
MP3 Player Phone
[stereo sound, downloadable
sound games and ring tones] A C C A

40. QD & D Practice Quiz[Snickers]
1. What would cause an “increase in QD” for Snickers?
a. increase in price of Snickers b. decrease in price of Snickers
c. decrease in income d. increase in number of consumers
2. What would cause an “increase in D” for Snickers?
a. increase in taste b. decrease in price of Snickers
c. decrease in income d. increase in the price of Snickers
3. What would cause a “decrease in QD” for Snickers?
a. increase in taste b. decrease in price of Snickers c. increase in price of Snickers
4. What would cause a “decrease in D” for Snickers?
a. decrease in income b. increase in taste c. decrease in price of Snickers
5. An “increase in the price of Butterfingers would
cause a(n) (increase/decrease) in (QD/D) for Snickers?

41. NS 1-10
1. (Demand/Supply) is identified as quantities consumers are willing
and able to buy at various prices during a given time period.
2. The law of demand says that price & QD are (directly/inversely) related.
3. The most important variable influencing decisions to produce and
purchase goods is (technique/price). (Price/income) is not held
constant when moving along a stable demand curve.
4. Income effect-the increase or decrease in purchasing power
brought on by a change in (taste/market size/price).
5. Substitution effect – tendency to substitute a (higher/lower)
-priced product for a more expensive product.
6. Diminishing marginal utility – utility, or (determination/anger/satisfation)
decreases as more of the same product [Snickers] is consumed.
7. The law of demand refers to a (movement/shift) along a demand curve.
8. Substituting chicken as the price of steak goes up is an example
of the (income/substitution) effect.
9. When the price of caviar falls, the purchasing power of our money income
rises & thus permits us to purchase more caviar. This is the (income/substitution) effect.
10. The demand (curve/schedule) is a numerical tabulation showing QD at each price.
The demand (curve/schedule) is a graphical representation of the law of demand.

42. NS
11. Elasticity of demand–the way price affects (attitude/quantity/market size).
12. (Inelastic/Elastic) demand – demand that is very responsive to price.
[A small price increase causes a large decrease in quantity demanded.]
13. (Inelastic/Elastic) demand-when a change in price has little impact on QD.
14. The 3-item test for elastic demand are substitutes, luxury items,
and (inexpensive/expensive) items.
15. The 3-item test for inelastic demand are no substitutes,
necessities, and (inexpensive/expensive) items.
16. Expensive cars have (inelastic/elastic) demand.
17. Pepsi Cola has (inelastic/elastic) demand.
18. Insulin has (inelastic/elastic) demand.
19. The elastic demand curve is more (horizontal/vertical). [much change]
20. The inelastic demand curve is more (horizontal/vertical). [not much change]

43. NS 21-26
21. With the invention of the calculator, the demand curve for the
slide rule (increased/decreased).
22. When Forest Gump went to China & the U.S. followed by
opening up relations with China, the demand curve for
Coke (increased/decreased).
23. An increase in income would (increase/decrease) the demand
for used clothing. [inferior good]
24. A decrease in income would (increase/decrease) the demand
for lobster. [normal good]
25. A decrease in the price of product X [lumber] will (incr/decr)
the demand for the complementary product Y. [nails]
26. After Brooke Shields[15] did her national TV ads[“Nothing comes
between me and my Calvin’s”], the “D” curve moved (right/left).
$45

44. NS 27-38 27. An increase in the price of Pepsi causes the
demand curve for Coke to move to the (right/left).
28. If there is a sale on shirts, the demand curve for ties will move
to the (right/left).
29. If a man’s workplace is about to close down, his demand
curve for major purchases would move to the (right/left).
30. If a cure for lung cancer were found, the demand curve for
cigarettes would move to the (right/left).
31. If the price of pancakes decreases, the demand
for syrup, a complement, will (increase/decrease).
32. If the price of butter decreases, the demand for margarine will (incr/decr).
33. A “change in QD” is caused by (price change/TIMER) [a “movement”]
34. A “change in D” is caused by (price change/TIMER) [a “shift”] e

45. “Econ, Econ”. Let
tell you about econ.
The End

46. 1.–QD 2. –D 3. +D 4.+D 5.+D 6.+D 7.–QD 8.–QD 9.+D 10.+D
1. Madonna gave a concert at the AAC after doubling the ticket
price and experiencing a change in anticipated attendance.
2. A decrease in taste causes the demand for lobster to shift.
3. A 20% increase in the price of Pepsi affect the sale of Coke.
4. Consumers expect the price of cell phones to increase 25% next month.
5. The sale of Ford F150s is affected when the U.S. begins trading with Cuba.
6. New autos decrease in price by 20% & the sale of gasoline is affected.
7. Victoria’s Secret increases the price of its thongs by
40% and experiences a change in the volume of sales.
8. Britney Spears triples the price of her album,
“Oops, I flunked Econ Again,” and sales are affected.
9. A drought in Texas destroys 40% of the state’s peaches & increases consumer expectations about a future price increase of peaches.
10. A 15% decrease in the price of motorcycles affect the sale of helmets.
Taste [direct]
Income [normal-direct] [inferior-inverse]
Market Size [# of consumers-direct]
Expectations [price-direct] [income-direct] [availability-inverse]
Related Good Price Changes [subs-direct] [complements-inverse]
1.–QD –D D D D
6.+D –QD 8.–QD 9.+D D

47. 1.+QD 2.+D 3. -D 4.-D 5. -D 6.+D 7.+QD 8.+QD 9.+D 10.+D
1. Christina gave a concert at the AAC after lowering the ticket
price and experiencing a change in anticipated attendance.
2. An increase in taste causes the demand curve for lobster to shift.
3. The sale of coke is affected by a 20% decrease in the price of Pepsi.
4. Consumers expect the price of XBOX to decrease 25% next month.
5. The sale of Dr Pepper is affected when the U.S. goes to war with China.
6. New SUVs decrease in price by 30% & the sale of gasoline is affected.
7. Victoria’s Secret decreases the price of its teddies by
50% and experiences a change in the volume of sales.
8. The Spice Girls lower the price of their album, “Oops,
We Actually Passed Econ,” and sales are affected.
9. A freeze in California destroys 70% of the state’s oranges and increases consumer expectations about a future price increase of oranges.
10. A 50% increase in the price of bread affect the sale of bagels.
Taste [direct]
Income [normal-direct] [inferior-inverse]
Market Size [# of consumers-direct]
Expectations [price-direct] [income-direct] [availability-inverse]
Related Good Price Changes[subs-direct] [complements-inverse]
1.+QD D D D D
6.+D QD 8.+QD 9.+D D

48. Review of Demand

49. Law of Demand [Change in QD]
Reasons For Downsloping “D” Curve
1. Income Effect –current buyers buy more.
2. Substitution Effect– new buyers now purchase.
3. Diminishing Marginal Utility - because buyers
of successive units receive less marginal utility,
they will buy more only when the price is lowered.
iPhone
[8GB]
$399.00
[with 2 yr contract]
Change in QD
1. Price change
2. Movement
[up/down the demand curve]
3. Point to point [along the curve]
Price QD
$250.00
Inverse relationship
QD1
QD2
“D” refers to the “whole curve”. [“all prices”]
“QD” refers to a “point on the curve”
based on a “particular price.”

50. P D1 D3 D3 P P Games for PS3 PS3 XBOX D D1 D2 D1 P1 P2
“Demand Shifters” [“TIMER”]
1. Taste [direct]
2. Income [normal-direct] [inferior-inverse]
3. Market Size [number of consumers-direct]
4. Expectations [of consumers about future price-direct,
about future availability-inverse, or about future income–direct.
5. Related Good Prices [substitutes-direct] [complements-inverse] D1 D2 D D1 D1 D3 P1 D3 D2 P P2 P P
Complement
[inverse]
QD1 QD2
Substitute
[Direct]
Games
for PS3
PS3
XBOX
Changes in “D” [curve]
1. Non price change [“TIMER”]
2. Whole “D” curve shifts
[There is a change in “QD” but it is
not caused by a change in “price.”
[QD-“singe price”; D-”all prices”]
QD3
QD1
QD2

51. D2 P 1."Change in Taste" [Direct] QD3 QD1 QD2 A decrease in taste
for videos results in a
decrease in demand.
An increase in taste
for DVDs results in an
increase in demand. D2 D1 D3 P
QD3
QD1
QD2

52. [Normal-Direct; Inferior-Inverse]
2. Change in Income
[Normal-Direct; Inferior-Inverse]
Used Cars
New Cars D2 D1
Less income
results in
more demand
for used cars;
less demand
for new cars.
More income
results in
more demand
for new cars;
less demand
for used cars. P
QD1
QD2

53. 3. Change in Market Size [Direct]
[Number of Consumers]
This is what we told one billion Chinese, as new potential
consumers, when we opened trade relations with them in 1972. D2 D1 P
New Cars
More demand
for both normal
& inferior goods
QD1
QD2
Used Cars

54. P 4. Expectations [of consumers]
[about future price, availibility, & income]
If Steve Jobs responds to iRate customers who
bought the iPhone at $599 and says, “iSorry,
we will raise the price back to $599 in 3 weeks.”
$399 D2 D1
Buy it now to save money.
iPhone P
QD1
QD2

55. 4. Expectations [of consumers]
[about future income]
Let’s say that we are coming out of recession & consumers
feel secure about their jobs. [Positive future income] D2 D1 P
QD1
QD2

56. 4. Expectations [of consumers]
[about future income]
Let’s say that we are going into a recession and consumers
don’t feel secure about their jobs. [Negative future income] D1 D2 P
QD2
QD1

57. 5. Prices of Related Goods [Substitutes-Direct; Complements-Inverse]
QD1
QD2
Substitute
[Direct]
Cereal
Milk
Pop Tarts

58. Substitutes - Direct Complements - Inverse Dr Pepper Coke Motorcycles
QD1 QD2
Helmets
Complements - Inverse

59. What is not held constant
Change in QD D
Change in QD
Price Change
Point to Point
Movement P1 P2
QD1 QD2 D
[INVERSE] P2 P1
What is not held constant
in these two graphs?
Price
QD QD1
“Change in Demand” D1 D1 D2 D2 P P
Do not confuse these
two with “Chg in QD”
Q1 Q2
Q2 Q1
Change in Demand
Non-Price Change
Whole Curve
Shift

60. [D – “TIMER; QD – price change [inverse] [Revised from previous]
__1. Which of the following will cause an “Decrease in D” for iPod nanos?
a. increase in income c. increase in the price of iPod nanos
b. decrease in income d. decrease in the price of iPod nanos
___2. Which will cause an “Decrease in QD” for iPod nanos?
a. decrease in income c. decrease in the price of iPod nanos
b. increase in income d. increase in the price of iPod nanos
___3. Which of the following will cause a “Increase in D” for HDTVs?
a. increase in the price of HDTVs c. decrease in # of consumers
b. decrease in the price of HDTVs d. increase in HDTV taste
___4. Which of the following will cause a “Increase in QD” for HDTVs?
a. increase in the price of HDTVs c. decrease in # of consumers
b. decrease in the price of HDTVs d. increase in IPOD taste B D D B

61. QD & D Practice Quiz [“Revised”]
1. What would cause a “decrease in QD” for KitKats?
a. increase in price of KitKats b. decrease in price of KitKats
c. decrease in income d. increase in number of consumers
2. What would cause a “decrease in D” for KitKats?
a. increase in taste b. decrease in price of Kitkats
c. decrease in income d. increase in the price of KitKats
3. What would cause an “increase in QD” for KitKats?
a. increase in taste b. decrease in price of KitKats c. increase in price of KitKats
4. What would cause an “increase in D” for KitKats?
a. increase in # of consumers b. decrease in taste b. decrease in price of KitKats
5. A “decrease in the price of Reese’s would
cause a(n) (increase/decrease) in (QD/D) for KitKats?

62. Elastic/Inelastic Demand.
Go over Total
Receipts Test
For Elastic &
Inelastic