Transcript The Law of Demand

• Objective: We will create demand schedules
and use the information to graph demand
curves, and differentiate between events that
cause shifts and movement along the curve.
• Agenda
– Bell Ringer: CBM #3 (Chapters 5 and 6)
– Preview – How much are you willing to pay?
– The Law of Demand and Demand Shifters
– Activity – Demand headlines
– Exit Ticket – Find your own!
The Law of Demand
How Consumers Make Choices
Economics Chapter 5
Supply and Demand
Classroom Demand Curve
Price
($)
10
9
8
7
6
5
4
3
2
1
# of Students
Willing to Pay
Classroom Demand Curve
• Now answer the following questions on your handout:
1. Why might some students be willing to pay $10 for this
product?
2. Why might some students choose not to pay even $1 for this
product?
3. You have created a demand curve for the product. What
happens to the quantity demanded for this product when
the price goes down? When the price goes up?
4. Most demand curves look similar to the one you created.
Given this, what do you think the “law of demand” might
say?
How Do Demand and Price Interact?
• Demand: what people are willing and able to
pay at various prices
• Demand Schedule: table that shows quantity
demanded at a specific price
• Demand Curve: the result of graphing the
data of a demand schedule
The Law of Demand
As the price increases, the quantity demanded
for a good or service does what?
It Decreases!
What happens as price declines?
The Quantity demanded Increases!
Law of Demand Continued
• Law of diminishing marginal utility: the more you
have consumed, the less satisfied you are
• The income effect: since income is limited, the
more the price rises , the less you are able to
consume
• The substitution effect: if 2 goods satisfy the same
want people will consume the cheaper of the two
Shifting Demand Curves
• Movement along the demand curve shows
how the quantity demanded changes as the
price changes
Price
D
Quantity
Shifting Demand Curves
• What causes the curve to shift to a new
position on the graph?
What Causes Demand to Change?
• Factors other than price can cause the
demand curve to shift (Demand Shifters)
1.
2.
3.
4.
5.
6.
Changes in consumer income
The number of consumers
Consumer tastes and preferences
Consumer expectations
The price of substitute goods
The price of complementary goods
Remember: a change in Price is NOT a demand shifter!
Analyzing Demand Headlines
• Pick a partner
• Read instructions on handout
• Be prepared to draw your curve on the board
and explain which demand shifter might
explain your curve.
Video Clip Options
Mr. Clifford!
Federal Reserve Bank
• https://www.youtube.com/
watch?v=LwLh6ax0zTE
• https://www.youtube.com/
watch?v=LqOzRAVOV9o
Exit Ticket
• Find a Newspaper or Internet Headline that will
shift the demand curve for a commonly used
good or service.
• Draw a demand curve that reflects how the
headline might shift the demand curve for the
good or service.
• Explain what factor(s) affect the curve and why.
Recap:
• Objective: We will create demand schedules
and use the information to graph demand
curves, and differentiate between events that
cause shifts and movement along the curve.
• Return Unit Tests 
Price
Demand Curve (original)
Quantity Demanded