CONTEMPORARY ECONOMICS: CHAPTER 4 © SOUTH-WESTERN1

CHAPTER 4 Demand

4.14.1 The Demand Curve

4.24.2 Elasticity of Demand

4.34.3 Changes in Demand

CONTEMPORARY ECONOMICS: CHAPTER 4 © SOUTH-WESTERN2

CHAPTER 4 Demand Why are newspapers sold in vending machines that

allow you to take more than one copy? How much do you eat when you can eat all you want? What cures spring fever? What economic principle is behind the saying, “Been

there, done that”? Why do higher cigarette taxes cut smoking by

teenagers more than by other age groups?

Consider

CONTEMPORARY ECONOMICS: CHAPTER 4 © SOUTH-WESTERN3

LESSON 4.1

The Demand Curve Explain the law of demand Interpret a demand schedule and

demand curve

Objectives

CONTEMPORARY ECONOMICS: CHAPTER 4 © SOUTH-WESTERN4

LESSON 4.1

The Demand Curve demand law of demand marginal utility law of diminishing marginal utility demand curve quantity demanded individual demand market demand

Key Terms

CONTEMPORARY ECONOMICS: CHAPTER 45 © SOUTH-WESTERN

Demand

Demand 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.

CONTEMPORARY ECONOMICS: CHAPTER 46 © SOUTH-WESTERN

Law of Demand

The law of demand says that quantity demanded varies inversely with price, other things constant. Thus, the higher the price, the smaller the quantity demanded.

CONTEMPORARY ECONOMICS: CHAPTER 47 © SOUTH-WESTERN

Law of Demand

Demand, wants, and needs  Substitution effect Income effect Diminishing marginal utility

CONTEMPORARY ECONOMICS: CHAPTER 48 © SOUTH-WESTERN

Demand Schedule and Demand Curve Demand versus quantity demanded Individual demand and market demand

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Demand SchedulePrice Quantity Demanded

per Pizza per Week (millions)

a $15 8

b 12 14

c 9 20

d 6 26

e 3 32

CONTEMPORARY ECONOMICS: CHAPTER 410 © SOUTH-WESTERN

Demand Curve for Pizzaa

b

c

d

e

D

8 14 20 26 32Millions of pizzas per week

$15

12

9

6

3

0

Pric

e pe

r pi

zza

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$12

8

4

1

(c) Chris

$12

8

4

1 2

(b) Brianna

$12

8

4Pric

e

1 2 3 Pizzas (per week)

(a) Hector

Individual Demand for Pizzas

dH dB dC

CONTEMPORARY ECONOMICS: CHAPTER 412 © SOUTH-WESTERN

$12

8

4Pric

e

1 2 3 Pizzas (per week)

(d) Market demand for pizzas

6

Market Demand for Pizzas

dH dB dC D+ + =