1. Starter Activity Look at the homework task
What does your graph look like?
What relationship between price and demand have you identified?
Discuss in groups

2. Lesson Objectives
To understand the relationship between Price and Demand
To understand other factors that can affect Demand

3. What determines demand
Discuss in groups

4. What determines Effective Demand?
Population structure
Taste/Fashions
Substitute/Complementary products
Price
Income levels
Competition

5. The Demand Curve Price (£) Demand
The demand curve slopes downwards from left to right (a negative slope) indicating an inverse relationship between price and the quantity demanded. Quantity demanded will be higher at lower prices than at higher prices. As price falls, quantity demanded rises. As price rises, quantity demanded falls.
Price (£)
£10 £5
Demand
100
150

6. Shifts in the demand curve
What would happen on your diagram if Pepsi invested £10million on an advertising campaign?
How would we show this on the curve?

7. Shifts in Demand Curves
Shifts will occur if there are changes that will affect demand at all price levels
Changes in price will NOT result in shifts in the demand curve – just a movement along it

8. Shifts in Demand
What changes could have resulted in shifts shown here?
Price (£)
£10 D1
Demand D2 10
100
200

9. Inferior Goods
For most products, as incomes rise, people have more spending power, and tend to demand more products.
Luxury, expensive items tend to be demanded more especially as incomes rise
Inferior goods are exceptions to this, and tend to be demanded less as incomes rise and more as incomes fall – can you think of some examples?

10. Plenary Draw a demand curve diagram that will illustrate the following
Demand for England Football shirts during a major tournament
Demand for brand new BMW cars during recession