Economics 31008 http:students.resa.netmilewski

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Economics 3/10/08 http//students.resa.net/milews
ki

• OBJECTIVE Begin examination of what is demand.
• I. Journal 14 pt.A
• -Read Profiles in Economics p.94
• -Answer question 1 p.94
• II. Journal 14 pt.B
• -notes on demand
• III. Homework due Friday 3/14/08
• 1.) Read Chapter4 section1 p.88-93
• -Answer questions (3-6) p.93
• 2.) Read Chapter4 section2 p.95-99
• -Answer questions (1,3-5) p.99
• Notice ACT/MME This Week!

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This Week

• Monday 3/10/08 Journal14
• Tuesday 3/11/08 Juniors ONLY!
• Wednesday 3/12/08 Juniors AM everyone PM School
  starts at 1145 Hours 1,2,3
• Thursday 3/13/08 Juniors AM everyone PM School
  starts at 1145 Hours 4,5,6
• Friday 3/14/08 Normal Day.

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What is demand?

• Demand the desire, ability, and willingness to
  buy a product.
• In a market economy, you compete with other
  consumers who demand the same products as you.
• If a lot of people demand the same product, the
  price will rise.
• If there are a lot of the same product, and very
  few people who demand it, the price will fall.

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Demand Schedule

• demand schedule - a listing that shows the
  various quantities demanded of a particular
  product at all prices that might prevail in the
  market at a given time.

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Demand Curve

• demand curve - a graph showing the quantity
  demanded at each and every price that might
  prevail in the market.

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Simplistic view of demand

• As price increases, demand decreases
• As price decreases, demand increases
• This is an inverse relationship
• When an inverse relationship is graphed, the
  slope is negative

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Marginal Utility

• Utility the amount of usefulness or
  satisfaction that someone gets from the extra use
  of a product
• Marginal utility the extra usefulness or
  satisfaction a person gets from acquiring or
  using one more unit of a product

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Diminishing Marginal Utility

• The more and more of a product we acquire, the
  extra satisfaction we get from using additional
  quantities of a product begins to diminish.

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Example 1

• How much satisfaction would you get from this?

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Example 1

• How much satisfaction would you get from this?

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Example 1

• How much satisfaction would you get from this?

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Example 2
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Example 2
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Example 2
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Economics 3/11/08 http//students.resa.net/milews
ki

• SCHOOL FOR JUNIORS ONLY!!!
• ACT/MME Test

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Economics 3/12/08 http//students.resa.net/milews
ki

• OBJECTIVE Examine the factors that affect
  demand.
• I. Journal 15 pt.A
• -Read The Business Week Newsclip p.100
• -Answer questions (1-3) p.100
• II. Journal 15 pt.B
• -notes on demand changes
• III. Homework due Friday 3/14/08
• 1.) Read Chapter4 section1 p.88-93
• -Answer questions (3-6) p.93
• 2.) Read Chapter4 section2 p.95-99
• -Answer questions (1,3-5) p.99

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Economics 3/13/08 http//students.resa.net/milews
ki

• OBJECTIVE Examine the factors that affect
  demand.
• I. Journal 15 pt.A
• -Read The Business Week Newsclip p.100
• -Answer questions (1-3) p.100
• II. Journal 15 pt.B
• -notes on demand changes
• III. Homework due Friday 3/14/08
• 1.) Read Chapter4 section1 p.88-93
• -Answer questions (3-6) p.93
• 2.) Read Chapter4 section2 p.95-99
• -Answer questions (1,3-5) p.99

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Demand Changes

• Change in quantity demanded movement along the
  demand curve
• Change in demand shift in the demand curve

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Change in Quantity Demanded

• When a change in price causes a change in
  quantity demanded.
• In this case, a lower price leads to an increase
  in quantity demand.

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Change in quantity demanded

• Income effect the change in quantity demanded
  because of a change in price alters consumers
  real income.
• Substitution effect the change in quantity
  demanded because of a change in the relative
  price of a product

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Example of the income effect

• If the price of a movie drops from 9 to 3, you
  might see more films because you have to work 2/3
  less than you did before to see one movie.
• When the price of goods and services drop and
  your income stays the same, you can buy more. It
  has a similar effect of a pay raise if prices
  remain the same.

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Example of the substitution effect

• If Wendys raised the price of their .99 extra
  value menu to 1.99 you may choose to substitute
  Wendys food with McDonalds 1.00 menu.

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Change in Demand

• When there is no change in price, but there is a
  change in the amount demanded at each and every
  price level.
• In this case, price didnt change but more was
  demanded.

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Change in Demand

• Consumer income as income goes up, the amount
  of goods and services you can buy also goes up
• Consumer tastes advertising, news reports, and
  style changes cause consumers to demand more or
  less of a product
• Substitutes products that can be used in place
  of other products i.e. butter/margarine

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• Complements goods that increase our use of
  other goods
• Change in expectations the willingness to buy
  more or less of a product based on future
  predictions
• Number of consumers as more consumers enter the
  market demand curve will shift to the right
  vice versa.

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Economics 3/14/08 http//students.resa.net/milews
ki

• OBJECTIVE Examine the factors that affect
  demand.
• I. Journal 16 pt.A
• -Examine Figure 4.3
• -Answer the caption question p.96
• -Examine Figure 4.4 p.98
• -Answer the caption question on p.98
• II. Journal 16 pt.B
• -notes on demand

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Change in Quantity Demanded

• When a change in price causes a change in
  quantity demanded.
• In this case, a lower price leads to an increase
  in quantity demand.

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Change in Demand

• When there is no change in price, but there is a
  change in the amount demanded at each and every
  price level.
• In this case, price didnt change but more was
  demanded.

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Complements

• What are the complements for Tony the Tiger?
• If Larrys Foodland put milk on sale, what might
  this do to Tony the Tiger?

http//americanheritage.us/Images/CAT_966941.jpg
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How Milk Prices affect Tony
Cereal
Milk

• The decrease in the price of milk will increase
  the demand for cereal.

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Substitutes

• What are the substitutes for this Fabio endorsed
  product?
• What would happen if Larrys Foodland increased
  the price of butter?

http//images.amazon.com/images/P/B00032CDPA.01-A3
CDPEGSIQM61V._SCLZZZZZZZ_.jpg
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How higher butter prices help Fabio
Margarine
Butter

• An increase in the price of butter will increase
  demand for the substitute good, I Cant Believe
  Its Not Butter