Demand

AS Economics

Aims and ObjectivesAim: • Understand how PPB curves can shift

Level Objectives:

E-D • Define demand

C-B • Calculate market demand

B-A • Analyse the effects of a change in price on demand.

A* • Evaluate different factors which may influence demand and price

Starter

• Define demand.

• List 3 things that you currently demand.

Demand & Effective Demand

Demand:• The amount that consumers are willing

and able to buy at each given price level.

Effective Demand:• Demand supported by the ability to pay

for a good or service.

A Demand CurvePr

ice

Qty Demanded

P2

P1

0Q1Q2

D

Remember your P’s and

Q’s!

A Demand CurvePr

ice

Qty Demanded

P2

P1

0Q1Q2

D

• As prices rise the level demanded will

fall.• Inverse relationship

Calculating Market DemandPr

ice

Qty Demanded

50p

02

D

Pric

e

Qty Demanded

50p

03

D

Pric

e

Qty Demanded

50p

05

D

Individual Demand 1 Individual Demand 2 Market Demand

Demand Curve Worksheet

1. Construct a demand curve to show how much she would purchase at each price level.

2. If she bought 40 songs on the basis of the demand curve what price level would you expect her to pay for each song?

3. If there is a rise in the price of drinks she plans to provide for her friends at the party her remaining income is limited. She will now buy 20% less at each given price level. Plot a demand curve to show this.

A Demand CurvePr

ice

Qty Demanded

P2

P1

0Q1Q2

D

• When price rises there is a movement along the demand curve.

• Contraction or Extension

P3

Q3

Contraction in Demand

Extension in Demand

Demand & Prices at Pride Park• ‘Buy in advance and

fans will get cheaper prices - but what if a sizeable group decides to start a game of chicken with the club and hold back from buying? As match day gets closer, ticket prices should move higher, but if demand for a game is well below the stadium's capacity will prices drop back?’