Demand

1
Demand

• Chapter 4 Section 1

2
Demand

• The desire to own something and the ability to
  pay for it
• Law of Demand
• Consumers buy more of a good when its price
  decreases and less when its price increases

3
Law of Demand

• Price goes up, demand goes down and vice versa

4
Substitution Effect

• Causes changes demand
• As the price of one good becomes more expensive
  people will consume more of similar goods.
• Pizzas price increases so people consume more
  tacos
• Think of other examples

5
Income Effect

• Causes changes in demand
• Change in consumption based on a change in income
• You buy less quantities of all goods because you
  are poorer.
• You spend more consume less
• Vice versa

6
Demand Schedule

• You just created a demand schedule
• A chart that lists the quantities of a good a
  person will purchase at a given price