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Unit 3
10/16 Do Now
What types of product do you buy: The most often? In the largest quantities?
Microeconomics
The area of economics that deals with behavior and decision making by small units, such as individuals and firms.
Utility
Amount of usefulness or satisfaction someone gets through the use of a product
Market Economy
People and firms act in their own best interest to answer the economic questions of what, how and for whom
Businesses need knowledge if demand to decide
Demand The desire, ability, and willingness to buy a
product
Demand Schedule
What happens as the price decreases?
What happens as the price increases?
Demand Curve
You read it from left to right.
Is the demand curve going up or down?
Demand Curve
A graph showing the quantity demanded at each and every price.
Demand Schedule
A listing that shows the various quantities demanded of a particular product at all prices
Demand Curve or Demand Schedule
Demand Curve or Demand Schedule
Law of Demand
As price increases, demand decreases
As price decreases, demand increases
In other words……Price affects demand
Market Demand Curve
Quantity demanded by everyone who is interested in the product.
….in other words, it is not based on one individual but the whole market.
Marginal Utility
Extra usefulness or satisfaction a person gets for buying one more unit of a product.
In other words…..if you buy more, you are more satisfied
Diminishing Marginal Utility
Satisfaction begins to diminish the more you use the product
Which means…….you are not willing to pay as much for the 2nd product
Example a buffet
Create Your Own Demand Schedule
Demand Curve
Choose something you buy often.
You need to include: 5 prices 5 quantities
Chapter 4, Section 2
Changes in Demand
Sample Market: Movies at home
Slow Fade Out for Video Stores
http://online.wsj.com/articles/SB10001424052748704082104575515933391663168
Read Together
Sample Market: Movies at home
1. Draw a timeline of movie rentals based on article
2. Why was Hollywood fearful of movie rentals?
3. Why did the market for video rental develop slowly?
4. Why did the market flourish?
5. Why did consumers turn away from video stores?
YouTube Research
Find a video that talks about the Law of Supply and Law of DEmand.
Cope the link into a google word document
Based on the video define Law of Supply and Law of Demand.
Rate the video on a scale of 1 to 4 on how well it explains the information.
Email or share me your document
Chapter 4, Section 2
Standard: 12.2.2 Discuss the effects of changes in supply and/ or demand on the relative scarcity, price, and quantity of particular products.
Objective: SWBAT apply factors influence change sin demand to changes that have occurred in the movie industry.
10/23 Do Now
What is the Law of Demand?
As price increases, demand decreases
As price decreases, demand increases
Todays Agenda
1. Do Now
2. Quick notes on Change in Demand Quantity
3. Change in Demand Project
4. Notes on Changes in Demand Factors
5. Case Study: McDonalds
Changes in Quantity Demanded
A movement along the demand curve that shows a change in the quantity of the product purchased in response to a change in price.
Income Effect
The change in quantity demanded because of a change in price that alters consumers’ real income.
Substitution Effect
The change in quantity demanded because of the change in the relative price of the product.
Change in Demand
People are now willing to buy different amounts of the product at the same prices.
Change in Demand Factors
Consumer Income
Consumer Taste
Substitutes
Complements
Changes in Expectations
Number of Consumers
Example: Movie Industry Changes
Movie Theatres
Video Cassettes
Movie Rental Stores
DVDs
Netflix
Online Streaming
Redbox and other rental stations
Project: Change in Demand
Explain the relationships between Changes in Demand Factors and changes in the movie industry
Assignment: Change in Demand
1. Read and review the factors on page 95-99
2. Draw Chart
3. Complete chart by explaining how demand changes for the movie industry was affected by a specific factor
Assignment: Change in Demand
Income
Taste
Substitutes
Complement
Expectations
# of Consumers
Movie Industry Change
Reason
Assignment: Change in Demand
Guided Question for Reasons
1. Why did the movie industry change occur?
2. How was it affected by demand?
3. Use the factor vocabulary in your reason
Change in Demand Factors
Consumer Income: Consumer’s money
Consumer Taste: What a consumer likes or does not like
Substitutes: A products that can be used in place of another product
Complements: Goods that are related to another good
Changes in Expectations: The way consumers think about the future of a product
Number of Consumers: Increase in the number of consumers can cause the market demand curve to shift.
Case Study: McDonalds
Read page 100
Answer question 1-4 in your notebook