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 would buy each week if the school sold them at those prices. Create a demand schedule Graph a demand curve “There is an inverse relationship between Price and Quantity”

Change in Demand v. Change in Quantity Demanded Visual 1.5 A movement from A to B is a change in quantity demanded. This movement along the curve is caused by a change in the price of the product. A movement from D to D1 or D to D2 is a change in Demand. This is caused by factors other than a chance in the price. Practice sketching change in quantity demanded v. a change in demand.

Change in Demand An increase in demand means people are willing and able to buy more at each price A decrease in demand means people are willing and able to buy less at each price. A movement from D to D1 (a shift right of the demand curve) is an increase in demand A movement from D to D2 (a shift left of the demand curve) is a decrease in demand.

Determinants of Demand Change in consumer tastes  Frozen yogurt becomes more popular Change in the number of buyers  More people move to Annapolis Change in consumer incomes  The average income in Annapolis increases Change in the price of complementary and substitute goods  Complimentary good-A good or service that is used in conjunction with another good or service. Ex: Ice Cream Cones  Ice Cream Cones become more expensive  Substitute good-A product or service that satisfies the need of a consumer that another product or service fulfills. Ex: Frozen Yogurt  Frozen Yogurt becomes more expensive Change in consumer expectations  People expect the price of ice cream to rise in the next few days

Practice Activity 1-4 Activity 1-5