Agenda 1) Entrance Ticket 2) Notes 3) HW 4) Exit Ticket

Entrance Ticket What do generic Tylenol, Spam, discount clothes, and used cars all have in common?

Other Nonprice Determinants Income Expectations of Buyers Prices of Related Goods

Income and Demand Generally, an increase in income causes buyers to purchase more at any given price (increase in demand) The exception is with inferior goods Inferior goods have an inverse relationship with consumer income: a rise in income can result in reduced demand for inferior goods (because they can buy better products)

Examples of Inferior Goods The Great Value generic brand at Wal-Mart

Expectations of Buyers When consumers anticipate future changes in price, income, or availability, their demand curves may change Ex) A storm is coming and consumers rush to buy lots of milk, bread, and bottled water

Prices of Related Goods Part One: Substitute Goods Substitute Goods: Goods whose prices are directly correlated with the demand of a similar product (e.g. Coke and Pepsi) Note: Substitute goods must be of comparable quality (they are not inferior) A rise in the price of Coca-Cola leads to a rise in the demand for Pepsi- Cola

Prices of Related Goods Part Two: Complementary Goods Complementary Goods: Goods whose prices are inversely correlated with the demand of a related product (e.g. DVDs and a DVD player)

HW Create a PowerPoint with 5 examples of inferior goods, 5 examples of substitute goods, and 5 examples of complementary goods Also include a statement about demand for each

Substitute Goods Example ! As the price of McDonalds goes up, so does the demand for Burger King

Exit Ticket Is target a substitute for wal-mart? Explain.