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# The Law of Demand - PowerPoint PPT Presentation

The Law of Demand. Objectives Explain the law of demand and how a demand schedule is represented in a demand curve. Understand the difference between and individual and a market demand curve. Law of Demand. Key Terms Demand Quantity demanded Law of demand Demand schedule Demand curve

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The Law of Demand

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## The Law of Demand

Objectives

Explain the law of demand and how a demand schedule is represented in a demand curve.

Understand the difference between and individual and a market demand curve.

### Law of Demand

• Key Terms

• Demand

• Quantity demanded

• Law of demand

• Demand schedule

• Demand curve

• Individual demand curve

• Market demand curve

### Law of Demand

• Demand

• Relationship between price and quantity demanded for a good or service, when other variables are held constant.

• The buying side in a market

• Quantity demanded

• The amount of goods and services purchased at a given price.

### Law of Demand

• Law of demand

• There is an inverse relationship between the price of a good or service and the quantity buyers purchase

• Guided by self interest

• Demand schedule

• A table that lists the quantity of a good or service consumers purchase at various possible prices

### Bob’s Demand Schedule for DVDs

Demand schedule: A table that lists the quantity of a good or service consumers purchase at various possible prices

### Law of Demand

• Demand Curve

• Formed by the line connecting points that represent possible combinations of price and quantity purchased by consumers

• A summary of buying intentions

### Market Demand

• Individual demand curve (D1)

• The demand for a single consumer

• Market demand curve (Dtotal)

• Sum of all the individual demand curves in a market

### Think/Pair/Share

• Create an individual demand schedule (weekly) for each of the following goods at the provided price increments:

• School Lunch \$2, \$4, \$6, \$8

• Bottled Water \$1, \$3, \$5, \$7

• DVD/BluRay \$5, \$10, \$15, \$20

• With a partner combine your individual demand to create a market demand schedule for each product.

**Remember to hold all other variables constant**

### Review

• True or False: The concept of demand is based on the responses of sellers to price changes

False

### Review

• True or False: A market demand curve is the sum of all the individual demand curves in a market

True

### Review

• The law of demand states there is an ___________ relationship between the price of a good or service and the quantity buyers purchase.

Inverse

### Review

• Quantity demanded is the __________ of goods and services purchased at a given price.

Amount

### HOMEWORK

• Demand Homework #1

• Plot and label the demand curve

• Fill in the blanks, or choose the appropriate answer provided