Begin End ShowTable of Contents Supply and Demand (3.2.2) Copyright © 2013 N.S

BeginEnd ShowTable of Contents

Supply and Demand (3.2.2)

Copyright © 2013 N.S.

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Table of Contents

Demand Survey“Law of Demand”

Targets“Law of Demand”

TargetsDefinition Changes in Demand

Demand Can ChangeIn Two Ways

You Draw the Graph

Increases Demand

Decreases Demand

The Effects ofShifting Demand

Access PriorKnowledge

Set GoalsNew

InformationActivity Conclusion

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Demand SurveyCircle the product that has been assigned to your group.

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Demand Survey

Price RangeNumber Who Would Pay This as the Highest Price

(Put Tallies Here)Totals

Actual Demand

Highest

Lowest

PrepareRanges

Circle the product that has been assigned to your group.

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Actual Demand

Highest

Lowest

Demand Survey

PrepareRanges

PollClassmates

$6.00

$5.00

$4.00

$3.00

$2.00

$1.00


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Actual Demand

Highest

Lowest

Demand Survey

Fill InThis Column

PrepareRanges

PollClassmates

I

I I I

I I

I

I I

I

$6.00

$5.00

$4.00

$3.00

$2.00

$1.00


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Actual Demand

Highest

Lowest

Demand Survey

Fill InThis Column

Fill InThis Column

PrepareRanges

PollClassmates

I

I I I

I I

I

I I

I

1

3

2

1

2

1


$6.00

$5.00

$4.00

$3.00

$2.00

$1.00

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Actual Demand

Highest

Lowest

Demand Survey

Fill InThis Column

Fill InThis Column

PrepareRanges

PollClassmates

Graph the Data

I

I I I

I I

I

I I

I

1

4

6

7

9

10

1

3

2

1

2

1


$6.00

$5.00

$4.00

$3.00

$2.00

$1.00

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Demand Survey

Price Range

$6.00

$5.00

$4.00

$3.00

$2.00

$1.00

Actual Demand

1

4

6

7

9

10Draw the Graph

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Demand Survey

Price Range

$6.00

$5.00

$4.00

$3.00

$2.00

$1.00

Actual Demand

1

4

6

7

9

10

What relationship does your graph illustrate between “quantity demanded” and price?”

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“Law of Demand” Targets

Knowledge 1 Describe the relationship between priceand quantity demanded.

Reasoning 2 Determine why demand curves mightshift.

Skill 2 Draw shifts in the demand curve.

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DefinitionIf all things are equal, consumers will demand more of a product as its price

decreases, and less of a product as its price increases.

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Definition

1) Lower prices are an incentive for consumers.

If all things are equal, consumers will demand more of a product as its price decreases, and less of a product as its price increases.

$89.95

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Definition

1) Lower prices are an incentive for consumers.

2) Higher prices for the same item will deter consumers.

If all things are equal, consumers will demand more of a product as its price decreases, and less of a product as its price increases.

$119.95

$89.95

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Demand Can Change in Two Ways

1) Change in “Quantity Demanded”

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•This is just a change along the demand curve.

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For example, the price for lemonademight change from $2.00 to $1.00


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•Notice how the blue demand line did not move. Just price changed, so we moved from one “quantity” to another.

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2) Change in “Demand”

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•This is a shift of the entire demand curve either “left” or “right.”

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For example, this might be a reallyhot day, so more people want lemonade

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•Notice how the new blue demand line shows that more lemonade will be demanded at every price.

D2

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You Draw the GraphOn your notes there is a graph labeled

“Increase in Demand.” Draw an increase in demand on that graph.

Increase in Demand

Draw This Graph

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Increase in Demand

D2

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On your notes there is a graph labeled “Decrease in Demand.” Draw a decrease in

demand on that graph.

Increase in Demand Decrease in Demand

Draw This Graph

D2

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On your notes there is a graph labeled “Decrease in Demand.” Draw a decrease in

demand on that graph.

Increase in Demand Decrease in Demand

D2

D2

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Increases DemandThere are six factors that will cause demand to increase.

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1) Consumers enter the market

Examples include an increase in the birth rate, an influx of immigrants, or students

arriving in a college town.

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Whenever people have more money (raise, tax refund, etc.), they are willing and able to

spend it on more things.

2) Consumers have more money

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If consumers think they will have more money in the future or that the economy will grow (along with prices), they will purchase now.


3) Consumers expect good things to happen in the future

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Items may become more popular due to a shift in tastes. This may happen because of

fads, beliefs, culture, or advertising.



4) Product is a fad (popular)

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If an item that serves a similar function (substitute) becomes expensive, consumers

will demand more of the original item.




5) Price of a substitute good increases

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When goods are consumed together (complements), a decrease in the price of

one makes both more appealing.




5) Price of a substitute good increases

6) Price of a complementary good decreases

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Decreases DemandThere are six factors that will cause demand to decrease.

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1) Consumers leave the market

Examples include a decrease in the birth rate, people moving away, or students leaving a

college town for the summer.

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Consumers will obviously not be able to buy as much if less money is available. This can

be caused by unemployment, taxes, etc.

2) Consumers have less money

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If consumers think they will have less money in the future or that the economy will shrink (along with prices), they will purchase later.


3) Consumers expect bad things to happen in the future

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Items may become less popular due to a shift in tastes. Products that were once in style

may suddenly become out of favor.



4) Product goes out of style

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If an item that serves a similar function (substitute) becomes inexpensive, consumers

will switch their demand to the substitute.




5) Price of a substitute good decreases

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When goods are consumed together (complements), an increase in the price of

one makes both less appealing.




5) Price of a substitute good decreases

6) Price of a complementary good increases

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The Effects of Shifting Demand

When the demand curve shifts, it affects quantity and price. Complete the table (on your notes) by deciding whether quantity and price increase or

decrease for each scenario. Use the graphs to help you.

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Effect on Quantity Effect on Price

Increase in Demand

Decrease in Demand

ShowAnswers

Draw the Graphs

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Increase in Demand

Decrease in Demand

ShowAnswers

Increase in Demand

D2

Decrease in Demand

D2

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Increase in Demand

Decrease in Demand

Increases ()

Decreases ()

Increases ()

Decreases ()

Increase in Demand

D2

Decrease in Demand

D2

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Changes in Demand

(a) Complete this version if you feel you need theteacher to work with you on this topic.

(b) Complete this version if you feel you have a fairlygood understanding of the targets.

(c) Complete this version if you feel this topic is easy.

This is today’s assignment.

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“Law of Demand” Targets

Knowledge 1 Describe the relationship between priceand quantity demanded.

Reasoning 2 Determine why demand curves mightshift.

Skill 2 Draw shifts in the demand curve.

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Resources

Documents

Begin End ShowTable of Contents Supply and Demand (3.2.2) Copyright © 2013 N.S