Or…My Pet Rock Died.. Demand : the desire to have some good or service and the ability to pay for...
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Transcript of Or…My Pet Rock Died.. Demand : the desire to have some good or service and the ability to pay for...
DEMANDOr…My Pet Rock Died.
WHAT IS “DEMAND”?
• Demand : the desire to have some good or service and the ability to pay for it.• It isn’t enough for
consumers to desire a good, if they cannot afford it.
• It isn’t enough for consumers to be able to afford a good, if they don’t really desire it.
THE LAW OF DEMAND
• When the price of a good of service falls, consumers buy more of it. (P, then QD)
• As the price of a good or service increases, consumers buy less of it. (P, then QD)
• Quantity demanded and price have an inverse (opposite) relationship.
DEMAND SCHEDULES
• A demand schedule is a table that shows how much of a good or service an individual consumer is willing and able to purchase at each possible price.
•A market demand schedule shows how much of a good or service all consumers are willing and able to buy at each possible price.
EX. PETER’S DEMAND SCHEDULE
Price per DVD ($)
Quantity Demanded
30 025 120 215 310 45 7
EX. QUAHOG’S (MARKET) DEMAND SCHEDULE
Price per DVD ($)
Quantity Demanded
30 5025 7520 10015 12510 1755 300
DEMAND CURVES• A demand curve is a graph that shows how much of a good or service an individual consumer is willing and able to buy at each price.
• A market demand curve is a graph that shows how much of a good or service all consumers in a market are willing and able to buy at each price.
EX. PETER’S DEMAND CURVE
Pri
ce p
er
DV
D (
in
dolla
rs)
5
15
20
25
30
10
1 2 3 4 5 6 7Quantity Demanded of DVDs
WHY DO DEMAND CURVES SLOPE DOWNWARD?
•The Law of Diminishing Marginal Utility – the benefit from using each additional unit of a good or service during a given time period tends to decline as each is used.