Substitutes income effect

BellringerThink back to your business idea from entrepreneurship week.

1. What was your entrepreneurial idea?

2. Who are your customers? (income?, age?, gender? Culture? Lifestyle?)

3. How often do they buy your goods/services in a day, month, year etc?

4. Are there any other products that people would buy along with your products?

Changes to demand

Does Demand change when the price of a good changes?

Only the Quantity demanded changes with price

Review:What is the Q*D at

Price = $1.50?When Q*D is at 50,

what is the price?

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Demand Vocab “complements” – a good that is purchased with

another “substitutes” – a good which can be substituted for

another Substitution effect - Changes to prices of similar

goods changes people’s demand

Normal goods – goods you buy more of when your income increases

Inferior goods – goods you buy less of when your income increases

Income Effect – changes to a person’s income changes their demand

Why is this important for firms?

What sorts of goods are these?

Others?Compliments?Normal/Inferior?

Cultural?

Preferences changeSouth Korea >>>>>

At your tables6. When would be a good time to sell normal goods? (when the economy is….?)

7. When would be a good time to sell inferior goods? (when the economy is…..?)

8. List two complements for ground beef

9. List two substitutes for ground beef

Determinants of Demand

Causes that will change Demand

Determinants of DemandChanges to tastes and preferences

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Determinants of DemandAvailability and price of substitute goods

Determinants of DemandAvailability and price of complements

Determinants of Demand

Changes to income

Determinants of DemandChanges to population

Determinants of DemandExpectations of future price

A trick to remember determinants of demand

T R I B ET = tastes of consumers

R = Related goods (P$ change)

I = Income of buyers

B = # of buyers

E = expectations of future price

http://quizlet.com/2043838/individual-markets-flash-cards/

http://quizlet.com/2043838/individual-markets-flash-cards/

Demand Curve Experiment

1. Conduct a demand curve experiment2. Choose 1 good (snickers bars, monster drinks,

movie tickets, takis bags, AZ ice tea, “5” packs of gum or Hershey bars)

3. Make up 5 price points and a time period4. Survey 5 people and find out their demand per

week (write their names)5. Graph the total demand on a correctly labeled graph6. Write an explanation of how the experiment shows

the law of demand in action AND how a company might use this information

BRWhich part of TRIBE will change in the following scenarios to the Tucson movie theater market?

1. Average wage in Tucson increases

2. Price of DVDs & flat screen TVs decrease

3. Population of Tucson doubles

4. New Brad Pitt & J-Lo movie comes out

5. KOLD reports movie tickets will increase 15% in 2014

6. Xbox1 & PS4 hit the stores

Quantity

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Graphically speaking… Demand of movie tickets

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A RAISE!!!!

A Child!!!!

D after raise

On a separate sheet of paper Graphically sketch the changes to the demand curve

Identify the part of TRIBE Label your graphs1. New residents move to Arizona (houses)2. Unemployment rises (steak)3. The price of buns increases (hot dogs)4. The internet gets more expensive (itunes mp3’s)5. Unemployment rises (studio apartments)6. You go to college (text books)7. Average income rises (Hawaiian vacations)8. Average income rises (used clothing)9. The price of meat increases (A1 steak sauce)10. Eegees releases a brand new flavor (slushies)11. Gas prices increase to $6.50/gallon (bicycles)12. Dept of Labor reports college grads earn more $$ (college degrees)

13. You read an article that gas prices will triple in October (gas)14. Make up your own example and show demand shift

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Technology

Substitutes income effect