BellringerAs always, go get your notebook

How much would you be willing to pay for this laptop computer? (what would be the most you

would be willing to pay)

MANKIWCHAPTER 4 ALL WEEK

Write answers on board

• Factors might change our answers?

Today

• Topic: Law of Demand and Consumer Surplus

• Why important: It’s the consumption side of our economy

What is “demand”?

• The amount of a good or service that a consumer is willing and able to buy at various prices during a given time period

Create Demand Schedule

Price Quantity Demanded

Graph on boardShow proper labels

Proper Economics Supply/Demand Graph

Price$$$$P$

Quantity# of goods/serviceQ

TITLE: _______ ___ Market

You try one

Widget Demand Schedule

PriceQuantity

Demanded

5 10

4 17

3 26

2 38

1 53 Demand curve reason ?

D

Law of Demand

Law of Demand: As price declines, quantity demanded increases. As price increases, quantity demanded decreases

Law of Demand: P Therefore Q demand

P Therefore Q demand

Demand curve always slopes down

A linguistic problem

• Does P$ change the actual demand of a good?

• NO, P$ change only changes quantity demanded

• “thinking on the margin”

• Chicken example D

D

Consumer SurplusConsumer surplus is the difference between the

amounts people would willingly pay for various amounts of specific goods and the amounts they do pay at market prices.