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Homework: None
FrontPage: Do you think you can have an effect on the price of something?
ECONOMIC SYSTEMS
or…
Capitalists do it with an invisible hand…
Chapter 2, Section 1
COMMAND ECONOMY
Or, …Do as I say, not as I don’t say…
Chapter 2, Section 2
MARKET ECONOMIE
S
Or…It’s Good to Be the King
Chapter 2, Section 2
MODERN ECONOMIES
IN A GLOBAL AGE
Or…Going to Your Happy Place
Chapter 2, Section 4
WHAT WERE OUR RESULTS?
DEMANDOr…My Pet Rock Died.
WHAT IS “DEMAND”?
• Demand : the desire to have some good or service and the ability to pay for it.• It isn’t enough for
consumers to desire a good, if they cannot afford it.
• It isn’t enough for consumers to be able to afford a good, if they don’t really desire it.
THE LAW OF DEMAND
• When the price of a good of service falls, consumers buy more of it. (P, then QD)
• As the price of a good or service increases, consumers buy less of it. (P, then QD)
• Quantity demanded and price have an inverse (opposite) relationship.
WHAT CREATES “DEMAND”?
http://abcnews.go.com/Nightline/video/silly-bandz-latest-fad-11686769
HOW MIGHT DEMAND BE CREATED FOR THE FOLLOWING ITEMS? Pirate playoff tickets?
Apple iPhone 6?
Peters Township homecoming tickets?
FOR WHAT REASONS MIGHT DEMAND FOR THESE ITEMS CHANGE? Pirate playoff tickets?
Apple iPhone 6?
Peters Township homecoming tickets?
http://abcnews.go.com/Nightline/video/silly-bandz-latest-fad-11686769
Homework: None
FrontPage: How are demand and price related?
THE LAW OF DEMAND
• When the price of a good of service falls, consumers buy more of it. (P, then QD)
• As the price of a good or service increases, consumers buy less of it. (P, then QD)
• Quantity demanded and price have an inverse (opposite) relationship.
DEMAND SCHEDULES
• A demand schedule is a table that shows how much of a good or service an individual consumer is willing and able to purchase at each possible price.
•A market demand schedule shows how much of a good or service all consumers are willing and able to buy at each possible price.
EX. PETER’S DEMAND SCHEDULE
Price per DVD ($)
Quantity Demanded
30 025 120 215 310 45 7
EX. QUAHOG’S (MARKET) DEMAND SCHEDULE
Price per DVD ($)
Quantity Demanded
30 5025 7520 10015 12510 1755 300
DEMAND CURVES• A demand curve is a graph that shows how much of a good or service an individual consumer is willing and able to buy at each price.
• A market demand curve is a graph that shows how much of a good or service all consumers in a market are willing and able to buy at each price.
EX. PETER’S DEMAND CURVE
Pri
ce p
er
DV
D (
in
dolla
rs)
5
15
20
25
30
10
1 2 3 4 5 6 7Quantity Demanded of DVDs
EX. QUAHOG’S DVD DEMAND CURVE
Pri
ce p
er
DV
D (
in
dolla
rs)
5
15
20
25
30
10
50 100 150 200 250 300
Quantity Demanded of DVDs
WHY DO DEMAND CURVES SLOPE DOWNWARD?
•The Law of Diminishing Marginal Utility – the benefit from using each additional unit of a good or service during a given time period tends to decline as each is used.
