Demand Understanding Demand & The Demand Curve Shifts.

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3 CHAPTER Demand and Supply.

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Demand Understanding Demand & The Demand Curve Shifts

What is Demand? At your tables write a definition for demand along with an example. Then send one member from your group to the board to write down your definition. What, if anything, do all of the definitions have in common? How are they different?

What is Demand? It is the willingness and ability of buyers to purchase different quantities of a good at different prices during a specific period of time. Willingness to purchase - a person’s want or desire for a good Ability to purchase - a person who has the money to pay for a good Both willingness and ability need to present for a good or no demand exists.

Law of Demand It is a law stating that as the price of a good increases, the quantity demanded of the good decreases, and that as the price of a good decreases, the quantity demanded of the good increases. If P then Q d

Law of Demand Price (P) Quantity Demanded (Q d )0

Demand Schedule & Demand Curve Demand Schedule - a numerical representation of the law of demand Demand Curve - a graphical representation of the law of demand

Change in Demand Demand for a good or service can rise or fall. This causes a shift in the demand curve; it either moves to the right or left. If demand increases, then the demand curve shifts rightward If demand decreases, then the demand curve shifts leftward

Change in Demand Price ($/lb) Quantity demanded of chicken (lbs) $1 $2 D1D1 D2D2 D3D3

Change in Demand Changes in 5 main factors can cause a change in demand Income - as income changes a person may buy more or less of a good or service Preferences - affect how much of a good or service a person will buy Prices of Related Goods - either substitutes or complements Number of Buyers - more, higher demand; less, lower demand Future Price

Change in Quantity Demanded Price causes the change in Quantity Demanded. It causes a shift along the curve; while the curve stays in the same place on the graph

Change in Quantity Demanded Price ($/lb) Quantity demanded of chicken (lbs) $1 $2 D1D1 B A