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CH 4: Demand 4-1: WHAT IS DEMAND?

CH 4: Demand 4-1: WHAT IS DEMAND? . Notes#1. What is demand? . Definition: demand is the willingness to buy a good or service and the ability to pay for it Must have both elements for demand to exist. Law of Demand.

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CH 4: Demand 4-1: WHAT IS DEMAND?

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  1. CH 4: Demand4-1: WHAT IS DEMAND? Notes#1

  2. What is demand? • Definition: demand is the willingness to buy a good or service and the ability to pay for it • Must have both elements for demand to exist

  3. Law of Demand • Definition: states that when prices go down, quantity demanded increases and that when prices go up, quantity demanded decreases

  4. Demand Schedule • Definition: a table (or listing) of how much of an item an individual is willing to purchase at each price

  5. Individual Demand Schedule

  6. Individual Demand Schedule (continued) • What can we learn from an individual demand schedule? • How much of an item one person is willing and able to by at a specific price • On the previous slide I am not willing nor able to buy any DVDs at $30 • But, I am willing and able to buy 7 DVDs if they are $5 each

  7. Market Demand Schedule • Definition: a listing of how much of a good or service all consumers are willing to purchase at each price • This shows the demand of all people in a market who are willing and able to buy a good/service

  8. Market Demand Schedule (continued) • Purpose: Business owners need a market demand schedule in order to price a good to gain the maximum number of sales

  9. Sample Market Demand Schedule

  10. Demand Curve • Definition: graphically shows the data from a demand schedule • Market Demand Curve • Definition: graphically shows the data from a market demand curve • Individual Demand Curve • Definition?

  11. Draw an Individual Demand Curve • Use the data below to construct an individual demand curve for DVDs

  12. Individual Demand Curve • Note: the vertical axis is always price and the horizontal axis is always quantity demanded (of a particular product)

  13. Applying What You Have Learned

  14. Vera Wang: Designer in Demand • Read P. 104 and answer question D.

  15. Questions • 1. Why is it unlikely that most brides will have demand for an original Vera Wang gown?

  16. 2. Explain why a demand curve slopes downward.

  17. 3. Does quantity demanded always fall as price rises? WHY? • 4. List 2-3 goods or services that you believe would remain in demand even if the price rose sharply.

  18. Create a demand schedule • 5. Pizza King makes the best pizza in town. Create a demand schedule (below) showing how many pizza per month you would buy at the following prices: $25, $20, $15, $10, and $5. Make sure to label the schedule accurately.

  19. 6. Graph your demand curve for pizza. Make sure to label your individual demand curve accurately.

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