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Goal 8   demand and changes
 

Goal 8 demand and changes

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    Goal 8   demand and changes Goal 8 demand and changes Presentation Transcript

    • Laws of Demand
      Goal 8
    • Discuss
      What is a market?
      In a market who is the consumer?
      How does the price of a good affect the consumer?
    • Market
      An arrangement that allows buyers and sellers to exchange things
      Markets exist because no one is self sufficient and no one produces all we require to satisfy all our needs and wants.
    • Demand
      Description
      The quantities of a particular good or service consumers are willing and able to buy at different possible prices at a particular time
    • Demand Illustration p.1 sec. 1
      As price goes up, quantity goes down
      Price
      D1
      Quantity
    • Discuss
      How does demand and “want” or “desire” differ?
      You may want or desire a new car or a closet full of clothes, but you demand these things only when you are willing and able to buy them.
    • Quantity Demand
      The quantities of a particular good or service consumers are willing and able to buy at set prices at a particular time
    • Quantity Demand Illustration
      Price
      D2
      Quantity
    • Demand Schedule
      How much people are going to buy at the various prices.
      Ex. The price of pizza
      Price
      Quantity
      $.50
      $1.00
      $1.50
      $2.00
      $2.50
    • Law of Demand
      As price goes up quantity goes down
      As price goes down quantity goes up
      People buy less of something at higher prices than they do at lower prices.
    • ELASTIC DEMAND:
      demand that is very sensitive to a change in price
      goods that one might stop buying or cut back on as price increased (SUVs, Luxury items)**on a graph this demand curve will be FLAT
    • INELASTIC DEMAND
      demand that is not very sensitive to a change in price
      goods that you would buy at any price; there are few if any substitutes for these goods.
      (milk, gas, prescription drugs) **on a graph this demand curve would be very steep.
    • Illustration of Decrease and Increase in Demand
      Decrease in Price
      Increase in Price
      Price
      Price
      D2
      D1
      D2
      D1
      Quantity
      Quantity
      The less you buy the more you will move to the left!
    • The Demand Curve
      The Demand Curve slopes downward to the right because the consumer is willing and able to buy more gasoline at lower prices than at higher prices.
    • Scenario #1
      Harris Teeter is advertising a sale on hot dog buns. What is the impact on the demand for hot dogs?
    • Scenario #2
      Playstation 3, the newest video game console, hits stores. What is the impact on the demand for Xbox 360?
    • Scenario #3
      The weatherman forecasts rain for the weekend in Charlotte. What is the impact on the demand for umbrellas?
    • Scenario #4
      The N.C. General Assembly increases minimum wage to $7/hour. What is the impact on the demand for clothing?
    • Scenario #5
      A snowy blizzard blows through Charlotte. What is the impact on the demand for snow boots?
    • Scenario #6
      The price of MP3 players decreases dramatically due to new technology. What is the impact on the demand for portable CD players?
    • Scenario #7
      Summertime is approaching. What is the impact on the demand for shorts?
    • Scenario #8
      The price of hamburgers increases at Food Lion. What is the impact on the demand for French fries?
    • Changes in Demand
    • Reasons Demand can change
      People’s Income
      Weather
      Complementary Goods
      Substitute Goods
    • What is a Complementary Good?
      Complementary Good: Two goods that are usually consumed together (Hot Dogs & buns)
    • What is a Substitute Good?
      Substitute Good: An acceptable replacement for a good (Playstation & Xbox)
    • People’s Income Increases
      P
      Effect on Demand
      Demand Increases
      (shift right)
      D1
      D2
      Q
    • Bad Weather (for product)
      Effect on Demand
      Demand Decreases
      (shift left)
      P
      D1
      D2
      Q
    • Price of Complementary Good Decreases (ex: peanut butter & jelly)
      P
      Effect on Demand
      Demand Increases
      (shift right)
      D1
      D2
      Q
      Peanut Butter
    • Price of Substitute Good Decreases (ex: Pepsi & Coca-Cola)
      P
      Effect on Demand
      Demand Decreases
      (shift left)
      D1
      D2
      Q
      Pepsi
    • Complementary vs. Substitute
      Can YOU tell the difference????
    • Substitute
    • Complementary
    • Substitute
    • Complementary
    • Substitute
    • Substitute
    • Complementary
    • Elasticity of Demand
      How much the quantity demanded will change if the price rises or falls.