1. Nature of
Demand

2. Learning Objectives:
 Understand key economic terms related to
demand
 Learn to create/interpret demand schedules
and demand curves

3. Demand
 The amount of a good
that consumers are
willing and able to buy at
a given point in time.

4.  Price
is the main variable affecting
demand, so…
Law of Demand:
 Increase in good’s price cause a decrease in
quantity demanded. Decrease in price causes
increase in quantity demanded.
Price = Demand
Price = Demand

5. Income Effect
 Purchasing power:
 amount of
goods/services one can
buy with a set amount of
$$
 Income effort:
 Change in purchasing
power due to change in
price

6. Substitution Effect
 Consumers tend to choose the lower-priced
product if similar

7.  Marginal
 Additional/more
 Utility
 Amount of satisfaction you get from consuming
a product
Diminishing Marginal Utility
 As more units are consumed, the
satisfaction you get from each
additional one decreases
 *demand has a limit!

9. New item*
Market price:$4,500

10. When will you buy the TV?
Date of Price per TV
Purchase (in dollars)
Today $4,500
April 2013 $3,500
Half-yearly sale $3,000
4th of July sale $2,000
Labor Day sale $1,500
Black Friday $900