Lesson 1 What is Chapter 4 Demand Demand?
Bellringer • How many movie DVD’s will people be willing to purchase at point a on the graph? • 3 • At point b on the graph? • 5
Bellringer • How is the change in quantity demanded for movie DVD’s illustrated on this graph? • The red line depicting the demand curve drops vertically and extends horizontally to show that as the price of movie DVD’s decreases, the quantity of the movie DVD increases.
Bellringer • Using the current graph, create a Demand Schedule . DVD Price Quantity Demanded $25 0 $20 1 $15 3 $10 5 $05 8
An In Introduction to Demand Main Idea: Because understanding demand — the combination of ability, desire, and willingness to purchase a product — is essential to understanding economics, we calculate and illustrate it.
An In Intr troduction to Demand • What are the two variables needed to calculate demand? • The price of a product • The quantity available at any given time
• What is a demand schedule? • A demand schedule is a listing that shows the quantity demanded at all possible prices that might prevail in the market at a given time. • How does a demand schedule help us understand the effect of changes in price on the amount demanded? • What point consumers consider the price of the product is too high • What prices would increase a consumer's An In Introduction to Demand demand for the product.
• Explain the difference between a demand schedule and a demand curve. • Shows all the information of a demand schedule in a graph format. • Would there be a reason to use one rather than the other? • A demand schedule would illustrate specific price points more clearly, while a demand curve shows a trend more directly An In Introduction to Demand
The Law of Demand Main Idea: The Law of Demand is reflected in the demand curve, which shows the relationship between price and quantity demanded
The Law of Demand • What does the Law of Demand state? • It states that more will be demanded at lower prices and less at higher prices • there is an inverse relationship between price and quantity demanded.
Th The La Law of f Demand • What kind of science is economics? • It's a social science. • What is a “law” in science? • A scientific law is a theory that is proven valid after repeated tests and fits within a larger understanding of the field.
Th The La Law of f Demand • How does a market demand curve differ from a demand curve? • The market demand curve shows the quantities demand by everyone who is interested in purchasing the product, while the term demand curve is used to describe the demand of an individual. • How are they similar? • The only difference between the curves is how many consumers it represents; the general shape and direction of the curves remains the same.
Demand and Marginal Util ilit ity The principle of diminishing marginal utility explains the price we pay for additional units of goods and services.
Demand and Marginal Utility • Explain the concept of marginal utility. • Marginal utility is the additional satisfaction or usefulness obtained from acquiring or consuming one more unit of a product. • Why is diminishing marginal utility important to the demand curve? • The more products we get, the less additional satisfaction we have, and that's why the demand curve slopes downward.
Describe an example of diminishing marginal utility in your experience. Demand and Marginal Util ility
• Directions: Summarize the main ideas of this lesson by answering the questions below. • Why is understanding demand Summary and important to understand how societies answer the basic WHAT, Refle lection HOW, and FOR WHOM questions? • How do we study demand, and how does demand behave?
Summary ry and Reflection • Directions: Summarize the main ideas of this lesson by answering the questions below. • Why is understanding demand important to understand how societies answer the basic WHAT, HOW, and FOR WHOM questions? • It is important to understand demand because it is central to the process of deciding WHAT, HOW, and FOR WHOM to produce. In order to study demand, we need to know the price of the product and the quantity available at any given time. • How do we study demand, and how does demand behave? • Tools such as demand schedules and demand curves help us visualize and understand how demand changes as prices change. According to the Law of Demand, when the price of something increases, the amount demanded decreases. However, the demand curve is also affected by diminishing marginal utility — consumers are less willing to pay as much for additional units as they did for the first because they gain less from those additional purchases.
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