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Goal 8 supply and demand

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Goal 8 supply and demand

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

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