1. CONTEMPORARY ECONOMICS: LESSON 4.1
Learning Objective:
Today I will be able to explain the law of demand by interpreting price changes on advertisements.
Agenda:
Learning Objective
Lecture: Ch. 4.1 Demand Curve
Price Changes on Advertisements
Exit Slip
CONTEMPORARY ECONOMICS: LESSON 4.1

2. CONTEMPORARY ECONOMICS: LESSON 4.1
Once recreational use of marijuana was legalized in the state of Colorado, how did it change the demand for marijuana?
How might this marijuana shop be a monopoly within the city of Breckenridge ?
Analyze how is it Cannabis meets capitalism?
CONTEMPORARY ECONOMICS: LESSON 4.1

3. Title Notes: Ch. 4.1 Demand Curve
CONTEMPORARY ECONOMICS: LESSON 4.1

4. Demand:
Consumer willing & able to buy.
indicates how much of a product consumers are both willing and able to buy at each possible price during a given period, other things remaining constant.
Law of Demand
The relationship between price & quantity demanded.
Higher the price, the less quantity demanded, vice versa.
Quantity demanded varies inversely with price, other things constant. .

5. CONTEMPORARY ECONOMICS: LESSON 4.1
Law of Demand
Demand, wants, and needs 
Consumer demand and consumer wants are not the same thing.
CONSUMER WANT vs CONSUMER DEMAND
CONTEMPORARY ECONOMICS: LESSON 4.1

6. I might be willing to buy certain things…

7. But, am I able to buy them?

8. CONTEMPORARY ECONOMICS: LESSON 4.1
Law of Demand
Substitution effect
Change in price of a good changes demand of similar goods– causes the substitution effect.
CONTEMPORARY ECONOMICS: LESSON 4.1

9. CONTEMPORARY ECONOMICS: LESSON 4.1
Cereal
CONTEMPORARY ECONOMICS: LESSON 4.1

10. CONTEMPORARY ECONOMICS: LESSON 4.1
Law of Demand
Income effect
Real income – that is, your income measured in terms of how many goods and services it can buy.
CONTEMPORARY ECONOMICS: LESSON 4.1

11. The satisfaction you get from a second pizza is your marginal utility of that pizza

12. CONTEMPORARY ECONOMICS: LESSON 4.1
Marginal Utility:
Satisfaction derived from additional unit of product.
The Law of Diminishing Marginal Utility – the more goods consumed per period, the less you consume.
The smaller total utility (satisfaction) increases from consuming one more unit, other things constant.
CONTEMPORARY ECONOMICS: LESSON 4.1

13. CONTEMPORARY ECONOMICS: LESSON 4.1
Law of Demand
Diminishing marginal utility (Continue)
The law of diminishing marginal utility helps explain why people buy more when the price decreases.
CONTEMPORARY ECONOMICS: LESSON 4.1

14. Explain the law of demand in your own words.
Checkpoint Pg. 105
Explain the law of demand in your own words.
CONTEMPORARY ECONOMICS: LESSON 4.1

15. Demand Schedule and Demand Curve
When you describe demand, you must specify the units being measured & time being considered.
Units: is 1 item/product
Ex. 13 units of pizzas= 13 pizzas.
CONTEMPORARY ECONOMICS: LESSON 4.1

16. CONTEMPORARY ECONOMICS: LESSON 4.1
Demand Schedule
Price Quantity Demanded
per Pizza per Week (millions)
a $15 8
b 12 14
c 9 20
d 6 26
e 3 32
. The schedule (chart) lists possible prices, along the quantity demanded at each price.
CONTEMPORARY ECONOMICS: LESSON 4.1

17. CONTEMPORARY ECONOMICS: LESSON 4.1
Demand Curve 8 14 20 26 32
Millions of pizzas per week
$15 12 9 6 3
Price per pizza a b c d e
. The curve (line) on the graph that shows the points or relationship between the quantity demanded at each price. D
CONTEMPORARY ECONOMICS: LESSON 4.1

18. CONTEMPORARY ECONOMICS: LESSON 4.1
Demand Curve for Pizza 8 14 20 26 32
Millions of pizzas per week
$15 12 9 6 3
Price per pizza
The demand curves slopes downward, reflecting the Law of Demand :
Price and quantity demanded are inversely, or negatively, related, other things constant. a b c d e D
CONTEMPORARY ECONOMICS: LESSON 4.1

19. Demand Schedule and Demand Curve
Demand versus quantity demanded
An individual point on the demand curve shows the quantity demanded.
Demand, is not a specific quantity, but the entire relation between price and quantity demanded.
CONTEMPORARY ECONOMICS: LESSON 4.1

20. Demand Schedule and Demand Curve
Demand Schedule and Demand Curve
Individual demand and market demand
The market demand curve shows the total quantity demanded per period by all consumers at various prices.
CONTEMPORARY ECONOMICS: LESSON 4.1

21. Individual Demand for Pizzas
$12 8 4
Price 1 2 3
Pizzas (per week)
(a) Hector
$12 8 4 1 2
(b) Brianna
$12 8 4 1
(c) Chris d H d B d C
CONTEMPORARY ECONOMICS: LESSON 4.1

22. Market Demand for Pizzas
$12 8 4
Price 1 2 3
Pizzas (per week)
(d) Market demand for pizzas 6 d H B C D + =
CONTEMPORARY ECONOMICS: LESSON 4.1

23. Demand Schedule and Demand Curve
Demand Schedule and Demand Curve
Individual demand and market demand
The market demand is simply the sum of the individual curves for all consumers in the market.
CONTEMPORARY ECONOMICS: LESSON 4.1

24. What do a demand schedule and demand curve show?
Checkpoint Pg. 107
What do a demand schedule and demand curve show?  ?
CONTEMPORARY ECONOMICS: LESSON 4.1

25. Price Changes on Advertisements
CONTEMPORARY ECONOMICS: LESSON 4.1

26. Price Changes on Advertisements
Step 1: Find an example of a business that recently raised or lowered prices. (ONLINE/GROUPON/NEWSPAPER/ADS)
___________________________________
Step 2: Answer questions
Did it increase or decrease? About how much did the price change?
How will the price change affect consumer demand of the product in the following areas:
Law of Demand:
Income Effect:
Substitution Effect:
Diminishing Marginal Utility:

27. CONTEMPORARY ECONOMICS: LESSON 4.1
Exit Slip
Identify a good OR service you consumed in the past that has made you follow the law of demand. Explain in what ways did you follow the law of demand.
CONTEMPORARY ECONOMICS: LESSON 4.1