Eco 7/2 The Demand Curve and Elasticity of Demand.

Slides:

Advertisements

Similar presentations

Chapter 4 The Law of Demand.

Advertisements

Demand Shifts. Law of Demand  Demand Curves shift when quantity demanded changes –Causes  Income –Normal good –Inferior good  Consumer expectations.

Chapter 3 Demand.

Economics Chapter 7 Supply and Demand.

Chapter 7 Supply & Demand

Demand and Supply. Demand  Consumers influence the price of goods in a market economy.  Demand : the amount of a good or service that consumers are.

 Demand- the desire to own something AND the ability to pay for it.  The Law of Demand PRICE GOES UP DEMAND GOES DOWN AND…. As price goes down, you.

3-2 Changes in Demand. What does it mean for a product’s demand to shift? What factors can shift demand for a product? How do substitute goods differ.

Supply and Demand DEMAND. In order to have demand you need someone with the desire for the product, ability to pay, and willingness to purchase. (BUYER).

WarmUp How would you describe supply and demand? How would you describe supply and demand?

Chapter 4 Demand.

Economics Chapter 4 - Demand. What Is the Law of Demand? The law of demand states that consumers buy more of a good when its price decreases and less.

Chapter 4 Understanding Demand Yoliann Pons Period.5

Section 1 Understanding Demand

Demand. –The desire to own something, and the ability to pay for it. The Law of Demand –As prices go up quantity demanded goes down. –As prices go down.

What Is the Law of Demand?

Chapter 4, Section 2.  There are a lot of reasons why demand for an item increases or decreases…  Price is one easy way to affect demand, but there.

Chapter 4 DEMAND.

Demand and Supply. What is a Market? –The process of freely exchanging goods and services between buyers and sellers. Where does the market exist? –Local.

Demand. Demand is: The amount of goods and services that consumers are willing and able to buy at various prices. Illustrated by the demand curve. Reflects.

Section 1- What is Demand?  Demand- The desire to have some good or service and the ability to pay for it.  If you cannot afford something, technically,

Graphing the Demand Curve A. A demand schedule is a table of prices and the quantity demanded at each price. B. Lists quantity demanded at different prices.

Chapter 7 The Demand Curve and Elasticity of Demand.

Chapter 4. The law of demand states that consumers buy more of a good when its price decreases and less when its price increases.  The law of demand.

The Law of Demand What is Demand?  Quantity demanded of a product or service is the number that would be bought by the public at a given price.

Markets Markets – exchanges between buyers and sellers. Supply – questions faced by sellers in those exchanges are related to how much to sell and at.

Economics Chapter 4 - Demand What Is the Law of Demand? The law of demand states that consumers buy more of a good when its price decreases and less.

CHAPTERS 4-6 SUPPLY & DEMAND Unit III Review. 4.1 Understanding Demand Demand: the desire to own something and the ability to pay for it. The law of demand:

Understanding Demand. Law of Demand Describes the behavior of consumers Write down $.50, $1.00, $2.00. Next to each number write the number of sodas you.

 Goal: Demand Summary Day  Warm-up: Demand Worksheet.

Explorations in Economics Alan B. Krueger & David A. Anderson.

“Demand”. Demand The desire, ability, and willingness to buy a product.

Supply and Demand Curves. Law of Demand and Demand Curve  Law of Demand= Relationship between the quantity demanded and price is inverse. (They move.

Economics Chapter 4 - Demand. What Is the Law of Demand? The law of demand states that consumers buy more of a good when its price decreases and less.

Chapter 4.  Demand – the desire AND ability to own or purchase  Does not refer to wishes or dreams  Law of Demand – the more it costs, the less you.

UNIT II Markets and Prices. Law of Demand Consumers buy more of a good when its price decreases and less when its price increases.

Unit 3 SUPPLY AND DEMAND. Chapter 4 DEMAND  To have demand for a product you must be WILLING and ABLE to purchase the product  WILLING + ABLE = DEMAND.

Supply and Demand.  Voluntary exchange, agreeing on terms  Demand in economics, the different amounts we will purchase at various prices.  Market 

Supply and Demand Curves. Law of Demand and Demand Curve  Law of Demand= Relationship between the quantity demanded and price is inverse. (They move.

Economics Chapter 4 Demand. Section 3 Elasticity of Demand.

Chapter 20.2 Factors Affecting Demand. Changes in Demand Market demand can change when more consumers enter the market; when incomes, tastes and expectations.

d $ QdQd Markets Markets: Exist because no one is self- sufficient. Markets: Are needed to sell what we have and to buy what we want. A buyer and seller.

Demand. How does Demand Affect Prices? What is Demand? –Obj: Explain the law of demand.

Demand The Demand Curve Elasticity of Demand Changes in Demand CHAPTER 4.

Demand. Demand- defn Law of Demand-(price effect) people buy less of something at higher prices and vice versa; movement along the curve 4 reasons –Buying.

Circular Flow of Economic Activity and What is Demand?

Demand Chapter 4. Understanding Demand Chapter 4, Section 1.

Change in quantity demanded vs. change in demand.

Demand What is demand?. Demand Demand - The desire to own something and the ability to pay for it. Law of Demand – Consumers will buy more of a good when.

Chapter 5 Econ Alive.  Demand is the actual curve that shows what buyers are willing to buy at a range of prices  Quantity Demanded is the number of.

21.1 Demand and 21.2 Factors Affecting Demand

Chapter 4 Demand.

21.1 Demand and 21.2 Factors Affecting Demand

Chapter 4 The Law of Demand.

The Demand Curve and Elasticity

The Demand Curve and Elasticity

Elasticity of Demand Unit 2.

Chapter 7 Supply & Demand

Demand Graphs How do they change?.

Unit 3: Microeconomics Lesson 1: Demand.

Drill # 1. What is demand? 2. What two effects cause the law of demand? 3. What is a demand curve?

Review with your Partners

Shifts in Demand Unit 2.

Chapter 4 Changes in Demand.

The Demand Curve and Elasticity of Demand

The Demand Curve and Elasticity

Ch. 7.2 The Demand Curve and Elasticity of Demand

Review with your Partners

Demand = the desire to own something and the ability to pay for it

Presentation transcript:

Eco 7/2 The Demand Curve and Elasticity of Demand

Graphing the Demand Curve 1.Demand schedule 2.Demand curve Each shows the law of demand.

Demand Schedule Table of prices and quantity demanded.

Demand Curve Plots the numbers of the demand schedule on a graph. Always a downward slope.

Quantity Demanded vs. Demand Quantity demanded is a specific point along the demand curve. A change in it results from change in price. Change in demand results in something other than price. People will buy more or less at all prices. Change in demand shifts whole curve left (less) or right (more).

Determinants of Demand Changes in population Changes in income Changes in Tastes and Preferences Substitutes Complimentary goods

Changes in Population When population increases, demand for TV sets increases (shifts right) at each price.

Changes in Income Demand for goods at all prices decreases (shifts left) if income decreases. Demand for goods at all prices increases (shifts right) if income increases.

Changes in Tastes and Preferences When an item becomes a fad, more are sold at every price. Curve shifts right. When no longer popular, curve shifts left.

Substitutes Butter/Margarine- If the price of butter stays the same and margarine falls, people will buy more margarine at all prices.

Complementary Goods If 2 goods are compliments, a change in the price of one will affect demand for the other. Cameras/film- If price of cameras drops, demand for film will increase. Computers/printers- If prices of computers rises, demand for printers will fall.

Price Elasticity of Demand Answers the question: “How responsive are consumers to an increase or decrease of price?” That responsiveness is ELASTICITY.

Elastic Demand For some goods, a rise or fall in price greatly affects demand. Demand for these products is called ELASTIC. Consumers can be flexible when buying these items. Coffee is very elastic. People will shift from Folgers to Tasters Choice.

Inelastic Demand If a price change does NOT result in a substantial change in quantity demanded, it’s inelastic. Pharmaceutical drugs are inelastic. People will buy them no matter how much the price is raised.

What Determines Price Elasticity of Demand? 1.Existence of substitutes- the more substitutes, the more elastic it is. (Soft drinks) 2.Percentage of total budget- pepper is inelastic; housing is elastic. 3.Time to adjust to price changes.

Substitutes The more substitutes, the more elastic a product is. People just switch when price rises.

Percentage of Total Budget If a product costs a small percentage of your total budget, like pepper, it’s inelastic. If it costs high percentage of total budget, like housing, it will be elastic.

Time to Adjust to Prices Longer the time span, the greater the price elasticity of demand. If cost of electricity skyrockets tomorrow, it will be inelastic, but over time, people will adjust their consumption.