1. Splash Screen

2. Section 1: What is Demand? Section 2: Factors Affecting Demand
Chapter Introduction
Section 1: What is Demand?
Section 2: Factors Affecting Demand
Section 3: Elasticity of Demand
Visual Summary
Chapter Menu

3. Think about the items you bought during the past two months
Think about the items you bought during the past two months. What influenced your purchases? Did you need the items, or did you buy them because you wanted them? Make a list of the items, and next to each one write why you bought it. Then add for each item whether you would have bought more if the price had been lower, or fewer had the price been higher. Read Chapter 4 to learn how economists interpret your actions.
Chapter Intro 1

4. Markets exist when buyers and sellers interact, and market prices are set by the interaction of demand and supply.
Chapter Intro 2

5. Chapter Intro-End

6. Section Preview
In this section, you will learn that you express demand for a product when you are willing and able to purchase it.
Section 1-Preview

7. Content Vocabulary Academic Vocabulary demand microeconomics
market economy
demand schedule
demand curve
Law of Demand
market demand curve
Academic Vocabulary
marginal utility
diminishing marginal utility
Section 1-Key Terms

8. Do you know how the price of an item is established? A. Definitely
B. Possibly
C. Definitely not A B C
Section 1

9. What is Demand?
Demand for a product is more than having the desire to own an item. Demand includes the ability and willingness to pay for it.
Microeconomics is the part of economic theory that deals with behavior and decision making by individuals and firms.
Section 1

10. An Introduction to Demand
Demand is a concept specifying the different quantities of an item that will be bought at different prices.
Section 1

11. An Introduction to Demand (cont.)
Demand is central to a market economy.
Demand involves two variables:
Price
Quantity of a specific product at a given point in time
The Demand for Compact Digital Discs
Section 1

12. An Introduction to Demand (cont.)
A demand schedule shows the various quantities demanded of a good at all prices that might prevail in the market at a given time.
A demand schedule shown graphically is a demand curve.
The Demand for Compact Digital Discs
Section 1

13. Which does the demand schedule show? A. Age demographic of buyers
B. Various quantities demanded
C. Prevailing market prices
D. Cost of producing product A B C D
Section 1

14. The Law of Demand
There is an inverse relationship between the price of an item and the quantity demanded.
Section 1

15. The Law of Demand (cont.)
Higher prices are associated with smaller amounts demanded on most goods or services we buy. This is the Law of Demand.
Quantity demanded varies inversely with its price.
The market demand curve shows quantities demanded by everyone in the market who is interested in the product/service.
Individual and Market Demand Curves
Section 1

16. What would be the highest price you would pay for your favorite movie on DVD?
D. None of the above A B C D
Section 1

17. Demand and Marginal Utility
As we buy more of an item, we get less satisfaction from each additional purchase.
Section 1

18. Demand and Marginal Utility (cont.)
Utility is the amount of product satisfaction or usefulness one receives from its use.
Marginal utility explains much about demand.
As we use more of a product, we encounter diminishing marginal utility.
Section 1

19. Can you name any products/services that do not have diminishing marginal utility?
A. Many
B. Some
C. Not at all A B C
Section 1

20. Section 1-End

21. Section Preview
In this section, you will learn about the factors that cause changes in demand.
Section 2-Preview

22. Content Vocabulary Academic Vocabulary change in quantity demanded
income effect
substitution effect
change in demand
substitutes
complements
Academic Vocabulary
principle
illustrated
Section 2-Key Terms

23. Do you think that changes in season affect demand? A. Definitely
B. Possibly
C. Not at all A B C
Section 2

24. Change in the Quantity Demanded
Only a change in price can cause a change in quantity demanded.
Section 2

25. Change in the Quantity Demanded (cont.)
When only the price changes and all else remains constant, there is a change in the quantity demanded.
Income effect
Substitution effect
A change in quantity demanded is a movement along the original demand curve.
Change in the Quantity Demanded
Section 2

26. Is the buyer’s “real income” really changing when a price changes?
A. Absolutely
B. Sometimes
C. Not at all A B C
Section 2

27. Change in Demand Several factors can cause the demand curve to shift.
Section 2

28. Change in Demand (cont.)
Factors other than price can cause a change in demand.
A change in demand results in an entirely new demand curve.
Change in Demand
Section 2

29. Change in Demand (cont.)
Factors for demand changes
Consumer income
Consumer tastes
Price of related goods
Substitutes
Complements
Change in Demand
Section 2

30. Change in Demand (cont.)
Expectations
Number of consumers
Change in Demand
Section 2

31. When consumers are willing to buy more due to an expected future shortage, what happens to the demand curve?
A. Demand increases, movement along demand curve slopes downward
B. Demand increases, curve shifts right
C. Demand increases, movement along demand curve slopes upward
D. Demand increases, curve shifts left A B C D
Section 2

32. Section 2-End

33. Section Preview
In this section you will learn about the factors that influence the size of a change in quantity demanded.
Section 3-Preview

34. Content Vocabulary Academic Vocabulary elasticity demand elasticity
inelastic
unit elastic
Academic Vocabulary
technical
adequate
Section 3-Key Terms

35. A. Revenue will increase B. Revenue will decrease
What happens to a farmer’s revenue if he or she raises the price of his or her watermelons?
A. Revenue will increase
B. Revenue will decrease
C. Revenue will stay the same A B C
Section 3

36. Elasticity of Demand
An important cause-and-effect relationship in economics is elasticity.
Profiles in Economics: Oprah Winfrey
Section 3

37. Demand Elasticity
When the price of an item changes, the change in quantity demanded can vary a little or a lot.
Section 3

38. Demand Elasticity (cont.)
Consumers react to changes in price by changing the quantity demanded. The size of the reaction is demand elasticity.
Demand can be
Elastic—fresh produce
Inelastic—table salt
Unit elastic
Demand Elasticity and the Total Expenditures Test
Section 3

39. If a given change in price causes a proportional change in quantity demanded, the demand is what?
A. Inelastic
B. Unit elastic
C. Elastic A B C
Section 3

40. The Total Expenditures Test
The total expenditures test is used to estimate the demand elasticity of a product.
Section 3

41. The Total Expenditures Test (cont.)
Total expenditures—the price of a product multiplied by the quantity demanded for any point along the demand curve.
Can test for elasticity by observing the change in total expenditures when the price changes. Three results occur:
Elastic demand—an “inverse” relationship between price and expenditures
Section 3

42. The Total Expenditures Test (cont.)
Inelastic demand—movement occurs in the same direction
Unit elastic—no change in expenditure
Elasticity and revenues
Raising the price of an inelastic product may help increase revenue.
Raising the price of an elastic product will likely decrease revenue.
Section 3

43. Is the demand for automobiles— A. Elastic? B. Inelastic?
C. Unit elastic? A B C
Section 3

44. Determinants of Demand Elasticity
The answers to three questions help determine a product’s demand elasticity.
Section 3

45. Determinants of Demand Elasticity (cont.)
Must answer three questions to determine if a demand for a good is elastic or inelastic.
Can the purchase be delayed?
Are adequate substitutes available?
Does the purchase use a large portion of income?
Determinants of Demand Elasticity
Section 3

46. Is the purchase of a prom dress or tuxedo— A. Elastic? B. Inelastic?
C. Unit elastic? A B C
Section 3

47. Section 3-End

48. Law of Demand The Law of Demand states that when the price goes up, quantity demanded goes down. When the price goes down, quantity demanded goes up.
VS 1

49. Change in Demand When a change in demand occurs, people want to buy different amounts of a product at the same price. A change in demand can happen for several reasons.
VS 2

50. Demand and Elasticity Changes in price and total expenditures help determine the demand elasticity of a product.
VS 3

51. VS-End

52. Figure 1

53. Figure 2

54. Figure 3

55. Figure 4

56. Figure 5

57. Figure 6

58. Oprah Winfrey (1954– )
first woman in history to produce and own her own talk show
first African American woman—and third woman in history—​to own a major television and film studio
Profile

59. DFS Trans 1

60. DFS Trans 2

61. DFS Trans 3

62. demand
combination of desire, ability, and willingness to buy a product
Vocab1

63. microeconomics
part of economics that studies small units, such as individuals and firms
Vocab2

64. market economy
economic system in which people and firms make all economic decisions
Vocab3

65. demand schedule
a table that lists how much of a product consumers will buy at all possible prices
Vocab4

66. demand curve
a curve that shows the quantities demanded at all possible prices
Vocab5

67. Law of Demand
rule stating that consumers will buy more of a product at lower prices and less at higher prices
Vocab6

68. market demand curve
a curve that shows how much of a product all consumers will buy at all possible prices
Vocab7

69. marginal utility
additional satisfaction or usefulness a consumer gets from having one more unit of the same product
Vocab8

70. diminishing marginal utility
decrease in satisfaction or usefulness from having one more unit of the same product
Vocab9

71. prevail
to predominate
Vocab10

72. inversely
in the opposite way
Vocab11

73. change in quantity demanded
movement along the demand curve showing that the amount someone is willing to purchase changes when the price changes
Vocab12

74. income effect
that part of a change in quantity demanded due to a change in the buyer’s real income when a price changes
Vocab13

75. substitution effect
that part of a change in quantity demanded due to a price change that makes other products more or less costly
Vocab14

76. change in demand
shift of the demand curve when people by different amounts at every price
Vocab15

77. substitutes
competing products that can be used in place of one another
Vocab16

78. complements
products that increase the use of other products
Vocab17

79. principle
a fundamental law or idea
Vocab18

80. illustrated
shown with an image
Vocab19

81. elasticity
a measure of responsiveness that shows how one variable responds to a change in another variable
Vocab20

82. demand elasticity
a measure that shows how a change in quantity demanded responds to a change in price
Vocab21

83. elastic
type of elasticity where a change in price causes a relatively larger change in quantity demanded
Vocab22

84. inelastic
type of elasticity where a change in price causes a relatively smaller change in quantity demanded
Vocab23

85. unit elastic
type of elasticity where a change in price causes a proportional change in quantity demanded
Vocab24

86. technical
related to a particular subject such as art, science, or trade
Vocab25

87. adequate
just enough to satisfy a requirement
Vocab26

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