1. UNDERSTAND HOW WE GRAPHICALLY REPRESENT CONSUMERS DEMAND A COMPETITIVE MARKET CONSUMER DEMAND

2. WHAT IS DEMAND? Think about any product that you have ever bought…what qualities created a consumer demand for it? Willingness, desire, and ability to buy Remember, CONSUMERS have demand (individuals), not businesses

3. THE MODEL’S ASSUMPTIONS The backdrop of a competitive market, meaning no one individuals actions have an impact on price We are operating in a free market system with open entry to the marketplace Ceteris Paribus will hold all other factors constant so we can isolate the relationship of price on quantity demanded Consumer taste, income, related goods prices, future expectations, and size of the market are not accounted for…yet

4. THE LAW OF DEMAND Relationship between price and quantity demanded is inverse As price increases, quantity demanded decreases As price decreases, quantity demanded increases

5. MOVEMENT ALONG VS. SHIFT BIGGEST CONCEPT YOU NEED TO UNDERSTAND! 2 variables: move along 3 rd variable included: shift