1. The Market Forces of Supply and Demand Chapter 4

2. Today in Class n Bellringer – take out your notebook for the bellringer n Take out your vocabulary n Outline for Unit – Chapter 4 n Notes – Supply and Demand n Complete all flashcards

3. Markets u A market is a group of buyers and sellers of a particular good or service. u The terms supply and demand refer to the behavior of people... as they interact with one another in markets. u And Economics, especially Microeconomics is about how supply and demand interact in markets.

4. 11/13/20154 Demand n Combination of desire, ability, & willingness to buy a product n A microeconomic concept äPart of economics that studies small units, such as individuals & firms

5. 11/13/20155 Demand Illustrated n Involves two variables äPrice äQuantity of a specific product n Demand depends on certain things ä# of people living in area, # and types of related goods, and consumer tastes & preferences

6. Demand Curve $3.00 2.50 2.00 1.50 1.00 0.50 213456789101211 Price of Ice-Cream Cone Quantity of Ice-Cream Cones 0

7. Why does the Demand Curve Slope Downward? n Law of Demand äInverse relationship between price and quantity. n Law of Diminishing Marginal Utility. äUtility is the extra satisfaction that one receives from consuming a product. äMarginal means extra. äDiminishing means decreasing.

8. Demand Curve $3.00 2.50 2.00 1.50 1.00 0.50 213456789101211 Price of Ice-Cream Cone Quantity of Ice-Cream Cones 0

9. Ceteris Paribus Ceteris paribus is a Latin phrase that means all variables other than the ones being studied are assumed to be constant. Literally, ceteris paribus means “other things being equal.” The demand curve slopes downward because, ceteris paribus, lower prices imply a greater quantity demanded!

10. Demand Schedule: Subway Sandwiches PriceAmount $ 20.000 sandwiches $ 15.00 0 sandwiches $ 8.001 sandwich $5. 002 sandwiches $ 4.503 sandwiches $ 3.005 sandwiches $ 2.0010 sandwiches

11. Demand Schedule Practice n Choose a product that you would like to produce. äAlbum on iTunes, or YA Novel (I.E. The Hunger Games) n Create 7 “prices” for your product. n Ask your classmate how many of your product they would buy for that price, and all of your other prices. PRICEAMOUNT $ $ $ $ $ $ $

12. Market Demand u Market demand refers to the sum of all individual demands for a particular good or service. u Graphically, individual demand curves are summed horizontally to obtain the market demand curve.

13. 11/13/201513 Market Demand Schedule PriceAndrew’s Demand Alex’s Demand Market Demand $3000 2501 2012 1533 1055 587