BellringerAs always, go get your notebook

How much would you be willing to pay for this iphone? (what would be the most you would be

willing to pay)

BellringerAs always, go get your notebook

How much would you be willing to pay for this laptop computer? (what would be the most you

would be willing to pay)

MANKIWCHAPTER 4 ALL WEEK

Today

• Topic: Law of Demand and Consumer Surplus

• Why important: It’s the consumption side of our economy

What is “demand”?

• The amount of a good or service that a consumer is willing and able to buy at various prices during a given time period

Create Demand Schedule

Price Quantity Demanded

Graph on boardShow proper labels

Proper Economics Supply/Demand Graph

Price$$$$P$

Quantity# of goods/serviceQ

TITLE: _______ ___ Market

You try one

Widget Demand Schedule

PriceQuantity

Demanded

5 10

4 17

3 26

2 38

1 53 Demand curve reason ?

D

Law of Demand

Law of Demand: As price declines, quantity demanded increases. As price increases, quantity demanded decreases

Law of Demand: P Therefore Q demand

P Therefore Q demand

Demand curve always slopes down

A linguistic problem

• Does P$ change the actual demand of a good?

• NO, P$ change only changes quantity demanded

• Chicken exampleD

D

Consumer SurplusConsumer surplus is the difference between the

amounts people would willingly pay for various amounts of specific goods and the amounts they do pay at market prices.