1. DEMAND
CHAPTER 20, SECTIONS 1 & 2

2. WHAT IS DEMAND?
Demand – the desire, willingness and ability to buy a good or service
Demand Schedule – a table that lists the various quantities of a product or service that someone is willing to buy over a range of possible prices
Demand Curve – a graph that shows the amount of product that would be bought at all possible market prices

3. WHAT IS DEMAND?
Law of Demand – quantity demanded and price move in OPPOSITE directions
Market Demand – the total demand of all consumers for their product or service

4. DEMAND ILLUSTRATED

5. DIMINISHING MARGINAL UTILITY
Diminishing Marginal Utility – the principle that our additional satisfaction (marginal utility) tends to go down as more and more units are consumed

6. CHANGES IN DEMAND
Changes in the number of consumers

7. CHANGES IN DEMAND
Changes in consumers’ income

8. CHANGES IN DEMAND
Changes in consumers’ tastes

9. CHANGES IN DEMAND
Changes in consumers’ expectations

10. CHANGES IN DEMAND
Changes in substitutes – competing products that can be used in place of one another

11. CHANGES IN DEMAND
Changes in complements – products that are used together

12. CHANGES IN DEMAND
Shift (increase) in demand for Oreo Cookies

13. ELASTICITY OF DEMAND
Demand elasticity – the extent to which a change in price causes a change in the quantity demanded

14. DEMAND ELASTIC
Products are usually demand ELASTIC when there are numerous, competitive substitutes

15. DEMAND INELASTIC
Price changes have very little effect on products that are demand INELASTIC (few or no substitutes)