View
218
Download
1
Category
Tags:
Preview:
Citation preview
CH 4: DEMAND4-1: WHAT IS DEMAND?Notes#1
What is demand?
Definition: demand is the willingness to buy a good or service and the ability to pay for it Must have both elements for
demand to exist
Law of Demand
Definition: states that when prices go down, quantity demanded increases and that when prices go up, quantity demanded decreases
Demand Schedule
Definition: a table (or listing) of how much of an item an individual is willing to purchase at each price
Individual Demand Schedule
Price (per DVD) Quantity Demanded
30 025 120 215 310 45 7
Individual Demand Schedule (continued)
What can we learn from an individual demand schedule? How much of an item one person is
willing and able to by at a specific price
On the previous slide I am not willing nor able to buy any DVDs at $30But, I am willing and able to buy 7
DVDs if they are $5 each
Market Demand Schedule
Definition: a listing of how much of a good or service all consumers are willing to purchase at each price This shows the demand of all people
in a market who are willing and able to buy a good/service
Market Demand Schedule (continued)
Purpose: Business owners need a market demand schedule in order to price a good to gain the maximum number of sales
Sample Market Demand Schedule
Price (per DVD) Quantity Demanded30 5025 7520 10015 12510 1755 300
Demand Curve
Definition: graphically shows the data from a demand schedule
Market Demand Curve Definition: graphically shows the data
from a market demand curveIndividual Demand Curve Definition?
Draw an Individual Demand Curve
Use the data below to construct an individual demand curve for DVDs
Price (per DVD) Quantity Demanded
30 025 120 215 310 45 7
Individual Demand Curve
Note: the vertical axis is always price and the horizontal axis is always quantity demanded (of a particular product)
Applying What You Have Learned
Vera Wang: Designer in Demand
Read P. 104 and answer question D.
Questions
1. Why is it unlikely that most brides will have demand for an original Vera Wang gown?
2. Explain why a demand curve slopes downward.
3. Does quantity demanded always fall as price rises? WHY?
4. List 2-3 goods or services that you believe would remain in demand even if the price rose sharply.
Create a demand schedule
5. Pizza King makes the best pizza in town. Create a demand schedule (below) showing how many pizza per month you would buy at the following prices: $25, $20, $15, $10, and $5. Make sure to label the schedule accurately.
6. Graph your demand curve for pizza. Make sure to label your individual demand curve accurately.
Recommended