Agenda- Bellringer

- Types of Goods notes

- Demand activity- Graphing demand

ObjectiveStudents will

identify the law of demand and how to

graph a demand curve by completing

a worksheet

Normal versus inferior goods

Normal good: When income goes up the quantity demanded increases with income;

Inferior good: When income goes down the quantity demanded decreases with income;

Normal good Examples:

New clothesNew carMovie theater ticketsMeals at a nice restaurant Caribbean vacationsNFL football gamesStarbucks

**When things are good, what do you splurge on?**

Inferior good Examples:

DVD rentalsUsed clothesUsed carsPublic transportationMcDonaldsCoffee at home

**When times are tough, what do you cut back on?**

Public Transportation

(bus)

Luxury cars or new cars

(purchased)

As income goes up, more people buy new cars or

luxury cars…..

As income decreases, more people use public

transportation

Ramen noodles Dinner at Number 5

As income goes up, more people go out to eat at nice

places…..

As income decreases, more people eat Ramen

noodles

Substitute goods: an increase in the price of one product leads to an increase in the quantity demanded of a cheaper, similar product

Complementary goods: A decrease in the price of one leads to an increase in the quantity demanded of the other.

substitute good Examples:

Tea (for coffee)Ford (for Toyota)Gap (for Abercrombie)Skippy peanut butter (instead of Jiff)Underarmour (Northface)Pepsi (coke)

**This is why companies offer coupons/sale prices!! Increase demand over competition!**

Complementary good Examples:

Hot dogs and bunsPencils and erasersDVD players and DVDSToothbrushes and toothpastePrinters and toner cartridges

**One is not good without the other. If there’s a sale on hot

dogs, people will automatically demand buns**