2. Group Work/Presentations
– Read the section that refers to your question(s).
– Prepare a presentation to teach your term(s) to
the class. Be sure to answer all questions from
your chapter or section.
– Add something from that section/chapter that
you think may be important/interesting for your
classmates to know.
– Create a visual aid as part of your presentation
for your chapter (skit, drawing, illustration, etc.)
3. Jumpstart Assignment
• Study for your Economics Overview
4. Jumpstart Assignment
• Turn to page 78 of your textbook, answer the
question under “Economics Journal.”
5. What is Demand?
• Demand – the desire and ability to buy
• The law of demand states that consumers buy
more of a good when its price decreases and less
when its price increases.
• This is because of the substitution effect and the
6. Demand Schedule
• A demand schedule is a table that lists the
quantity of a good a person will buy at each
• A market demand schedule is a table that
lists the quantity of a good all consumers in a
market will buy at each different price.
7. Demand Curve
• The demand curve is always downward sloping.
• Change in Quantity Demanded – a movement
along the demand curve, a result of the change in
the price of a good
• Change in Demand – a shift in the demand curve
8. What Causes Shifts in Demand?
Changes in consumers incomes affect demand. A
normal good is a good that consumers demand more
of when their incomes increase. An inferior good is a
good that consumers demand less of when their
2. Consumer Expectations
Whether or not we expect a good to increase or
decrease in price in the future greatly affects our
demand for that good today.
9. What Causes Shifts in Demand?
Changes in the size of the population also
affects the demand for most products.
4. Consumer Tastes and Advertising
Advertising plays an important role in many
trends and therefore influences demand.
10. 5. Change in Demand for Other Goods
Complements are two goods that are bought
and used together. Example: skis and ski
Substitutes are goods used in place of one
another. Example: skis and snowboards
What Causes Shifts in Demand?
11. Jumpstart Assignment
• Describe the difference between a change in
demand and a change in quantity demanded,
then show what it looks like graphically.
12. Elasticity of Demand
• Elasticity of demand is a measure of how
consumers react to a change in price.
• Demand for a good that consumers will continue
to buy despite a price increase
13. Elasticity of Demand
• Demand for a good that is very sensitive to
changes in price is elastic.
14. Total Revenue Test
• Elastic Demand – TR will increase with a drop in
• Inelastic Demand – TR will decrease with a drop
15. Factors Affecting Elasticity of Demand
• Availability of Substitutes
• Relative Importance (portion of budget)
• Necessities vs. Luxury