DEMAND
DURIANP 50/KILO
DURIANP 30/KILO
OBJECTIVES
1. Understand and analyze the likely change in demand given changes in price or changes in the price of related goods such as substitutes and compliments goods, income, taste and preferences, and expectations.
2. Apply the concept and the law of demand by creating their personal demand curve and schedule as guide for daily economic decision-making activity.
TERMS• Demand
• Law of Demand
•The quantity of a good or service that buyers are willing and able to buy at all possible prices during a period of time.
•As the price of a good or service rises (or falls), the quantity of that good or service that people are willing and able to buy during a certain period of time falls (or rises).
Role of Consumer DEMAND CURVE
QTY
Price per kilo of Durian
Kilo of Durian
20
30
40
50
5 10 15 20
P
D
PRICE QUANTITY
P 20 18
P 30 10
P 40 6
P 50 3
SHIFTS in the Demand Curve
P 10
25 4010
D
What factors would cause
a SHIFT in the demand for coffee?
P
SHIFTS in the Demand Curve
P 10
25 40
D
Income
What would happen if you
receive an increase in income?
More coffee is demanded at P10
D2
NORMAL GOOD
You could buy
more coffee
P
SHIFTS in the Demand Curve
P 10
25 0
D
Income
What would happen if your income were
to increase…BUT demand went
down?
INFERIOR
GOOD –
You could buy
better coffee
Less coffee is demanded at P10
D2
10
If you would buy the same amount of a good/service regardless of a change in income you would have a
NEUTRAL GOOD
(perhaps like toilet paper or toothpaste)
P
SHIFTS in the Demand Curve
P 10
25 0
D
Income
What would happen if your income were
reduced?
Less coffee is demanded at P10
D2
10
P
SHIFTS in the Demand Curve
P10
25 40
D What if you began to enjoy coffee
more than before?
More coffee is demanded at P10
D2
P Change in Preferences
SHIFTS in the Demand Curve
P10
25 0
D
Change in Preferences
What if you started to get sick of drinking coffee?
Less coffee is demanded at P10
D2
10
P
SHIFTS in the Demand Curve
P 10
25 0
D
Expectations
What if you knew there was going to be a sale on coffee
next week?Less coffee is demanded at P10
D2
10
P
SHIFTS in the Demand Curve
P 10
25 40
D
Expectations
What if you knew that a sale on
coffee were ending tonight?
More coffee is demanded at P10
D2
LAST DAY
P
SHIFTS in the Demand Curve
P 10
25 0
D
Price of Related Goods
Less coffee is demanded at P10
D2
10
SUBSTITUTES
P
SHIFTS in the Demand Curve
P 10
25 40
D
More coffee is demanded at P10
D2
SUBSTITUTES
Price of Related Goods
P
SHIFTS in the Demand Curve
P 10
25 40
D
More coffee is demanded at P10
D2
COMPLIMENTS
Price of Related Goods
What if the price of donuts went
down?
P