date: march 13, 2014 topic: the law of demand aim: how does demand affect decision making? do now:...
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DateDate: March 13, 2014: March 13, 2014
TopicTopic: The Law of Demand: The Law of Demand
AimAim: How does demand affect decision making?: How does demand affect decision making?
Do NowDo Now: Multiple Choice Questions. : Multiple Choice Questions.
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Would you buy a slice of pizza for lunch if it cost:
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What is demand?
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The law states that all other factors being equal, as the price of a good or service increases, consumer
demand for the good or service will decrease.
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Demand results from two patterns of behavior:
OR
• When a consumer reacts to the increase in price of one good by consuming less of that good, and more of a substitute good.
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Demand results from two patterns of behavior:
•Buy fewer slices of pizza and do not substitute.•Consumption goes down.•That is the income effect!!!
•Price decrease, feel wealthier, consumption increases
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•Based on the chart: How does an increase in the price of A affect consumption of other goods?
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• A table that lists the quantity of a good that a person will purchase at each price in a market.
• Shows the quantities demanded at each price by all consumers in the market.
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DEMAND CURVE• Representation of a demand schedule.
• Shows relationship between the price of the good and the quantity purchased.
• Slopes downward: Law of Demand.
Remember: As the price of a good/service increases, the quantity
purchased will decrease.
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A Demand Schedule
Price ofDVD MOVIES
Number of DVD MOVIES
People Want to Buy
$5.00 18
$10.00 13
$15.00 10
$20.005
$25.00 0
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TIME TO MAKE A MARKET DEMAND SCHEDULE.
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How does How does demand affect demand affect
decision decision making?making?