Demand

Demand : Demand

Demand : Demand The amount of a good or service that a consumer is willing and able to buy at various prices during a specific time. Demand is subject to change.

Quantity demanded : Quantity demanded The amount of a good or service that a consumer is willing and able to buy at each particular price. Ex: I can only buy one pair of shoes if they are $50, but if they are only $10, I will be willing and able to buy more. Quantity demanded goes up.

Demand Schedule : Demand Schedule Table which shows the demand for a particular good or service. Shows quantity demanded at particular prices Useful when determining profitability Demand Schedule for stuffed animals

Demand Curve : Demand Curve Shows the demand for a particular good in graphic form. Take the demand schedule and plot it on a graph.

Creating a demand curve : Creating a demand curve Plot points Connect dots Voile! A lovely demand curve is born!

Our new demand curve : Our new demand curve OK, curve is the ideal!

Law of Demand : Law of Demand Price affects demand If price goes up, the quantity demanded goes down. If price goes down, the quantity demanded goes up. If plasma TVs cost $5, we’d all have one, or 2 or 3.

Law of Demand creates a Riot! : Law of Demand creates a Riot!

Income Effect : Income Effect Income affects the quantity demanded. Income increases, quantity demanded increases. Vice versa. Purchasing power: $ you have to spend The more cash you have, the more you can buy.

Substitution Effect : Substitution Effect The availability of similar goods affects demand. People will substitute lower priced products for more expensive ones. Generic v. name brand goods

Substitution Effect : Substitution Effect The availability of a substitute good can decrease the demand for a higher priced good. Involves choices: opportunity costs.

Substitute Goods??? : Substitute Goods??? Five star hotel Youth Hostel

Diminishing Marginal Utility : Diminishing Marginal Utility The usefulness (utility) of a good eventually decreases, so you won’t buy any more. At some point you don’t want any more no matter what the point. How many burgers can you really consume??