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Supply and Demand

Supply and Demand. “You can’t always get what you want, but if you try sometimes, you just might find, you can get what you need.” – Mick Jagger. “Hey, I have a degree in Economics, too!”. What is Demand?. Question: -Would you buy a slice of pizza for $1? -What if the same slice cost $2?

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Supply and Demand

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  1. Supply and Demand

  2. “You can’t always get what you want, but if you try sometimes, you just might find, you can get what you need.” – Mick Jagger “Hey, I have a degree in Economics, too!”

  3. What is Demand? Question: -Would you buy a slice of pizza for $1? -What if the same slice cost $2? -What if the same slice cost $10? Demand- the desire to own something and the ability/willingness to pay for it

  4. Who demands goods and services? Consumers!

  5. How do consumers drive demand? By purchasing one good or service at the expense of another (think back to opportunity cost). or

  6. The Law of Demand “Everything being equal, more of a good will be demanded at a lower price, and vice versa”

  7. The Demand Curve •Slope: •Relation to Price:

  8. When price changes, the amount (quantity) demanded also changes

  9. The demand curve can be moved due to one of several things changing.

  10. Things you can control affect your demand for goods and services • # of consumers 2. Consumer tastes

  11. Things you CAN’T control can affect your demand 3. Change in income levels (Normal good vs Inferior good) 4. Change in price of OTHER goods (Compliments vs Substitutes)

  12. So, what affects your demand? Or Or X X X

  13. or and and

  14. Draw a demand curve and label all shifts for each of the following scenarios. • Tucson’s population booms a. Demand for burritos: 2. The Health Dept. announces that Nico’s has las cucarachas crawling around its kitchen! a. Demand for burritos:

  15. Draw a demand curve and label all shifts for each of the following scenarios. 3a. Consumer income INCREASES •Demand for Lexus cars: •Demand for bus passes: 3b. Consumer income DECREASES •Demand for new homes: •Demand for apartments:

  16. Draw a demand curve and label all shifts for each of the following scenarios. 4a. The price of veggie dogs increases •Demand for buns: •Demand veggie burgers: 4b. The price of MacBooks decreases •Demand for computer case: •Demand for Dell laptops

  17. The demand curve looks different depending on wants vs. needs OOOr Insulin Botox Elasticity of Demand:

  18. Elastic goods • Elastic goods: Describes demand that is very sensitive to a change in price • Change in price = large change in quantity demanded.

  19. Inelastic goods 2. Inelastic goods: Describes demand that is not very sensitive to a change in price. • Change in price = small change in quantity demanded.

  20. There are four ways to determine the elasticity level of a good or service. • Time (short run vs. long run) 2. Necessity (need vs. luxury) 3. Type of good (general vs. specific) 4. Level Expense (cheap vs. expensive)

  21. Draw two demand curves for each of the following scenarios (make sure to correctly and completely label all graphs): 1. Airline ticket: a. Consumed by business travelers b. Consumed by casual vacationers 2. New car: a. Your’s just broke down and you need to get to work! b. Planning to buy one once you get your end-of-year bonus 3. Going to the movies: a. You love Batman and want to see the new movie… b. You want to kill time while waiting for your car to get repaired

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