DemandDemand

DemandDemand• The amount of a good or service that a consumer

is willing and able to buy at various possible

prices during a given time period.

The graph can be any shape/curve, as long as it is pointing down!

$

# of Goods/Services

Quantity DemandedQuantity Demanded

• The amount of a good or service that a consumer is

willing and able to buy at each particular price during

a given time period.

$100

22

# of iPods

PriceOf

iPods

At $100 dollars per iPod, the quantity demanded is 22.

Law of DemandLaw of Demand• An increase in a good’s price causes a decrease in the

quantity demanded.

• A decrease in a good’s price causes an increase in the quantity demanded.

• EXAMPLE:– You want to buy an iPod. If it is cheap, do you have a high

demand or low demand for it? If the price goes up, does your demand increase or decrease?

P = D , P = DP = D , P = D

Demand for Twix

$.50

$1.00

$1.50

$2.00

5 10 15 20

At $1.00 per candy bar, about 16 Twix are demanded by students in this class. If the price of Twix increases to $1.50 per candy bar, the quantity demanded will DECREASE to ?????

D -1

D -2Think about Think about how you react how you react

to price to price changes…changes…

Quantity Demanded

Diminishing Marginal UtilityDiminishing Marginal Utility

• As more unites of a product are consumed, the satisfaction received from consuming each additional units declines.