Date: March 13, 2014 Topic: The Law of Demand Aim: How does demand affect decision making? Do Now: Multiple Choice Questions.

Would you buy a slice of pizza for lunch if it cost:

What is demand?

The law states that all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease.

Demand results from two patterns of behavior: OR When a consumer reacts to the increase in price of one good by consuming less of that good, and more of a substitute good.

Demand results from two patterns of behavior: Buy fewer slices of pizza and do not substitute. Consumption goes down. That is the income effect!!! Price decrease, feel wealthier, consumption increases

Based on the chart: How does an increase in the price of A affect consumption of other goods?

A table that lists the quantity of a good that a person will purchase at each price in a market. Shows the quantities demanded at each price by all consumers in the market.

DEMAND CURVE Representation of a demand schedule. Shows relationship between the price of the good and the quantity purchased. Slopes downward: Law of Demand. Remember: As the price of a good/service increases, the quantity purchased will decrease.

A Demand Schedule Price of DVD MOVIES Number of DVD MOVIES People Want to Buy $ $ $ $ $25.000

TIME TO MAKE A MARKET DEMAND SCHEDULE.

How does demand affect decision making?