Bellringer, As always, get out your notebookIn your notes: How much would you be willing to pay for this computer? (what would be the most

you would be willing to pay)

Write answers on board• Factors might change our answers?

• Reading assignment: Ch 4 Mankiw, due by Mon• Your choice: annotate & show me• OR on a paper, A.4 examples from real life of conceptsB.3 ways to test Mankiw’s ideas (simulations,

research)C.2 or more questions you have about the text

Today

• Topic: Law of Demand and Consumer Surplus

• Why important: It’s the consumption side of our economy

What is “demand”?

• The amount of a good or service that a consumer is willing and able to buy at various prices during a given time period

Create Demand Schedule

Price Quantity Demanded

Graph on boardShow proper labels

Proper Economics Supply/Demand Graph

Price$$$$P$

Quantity# of goods/serviceQ

TITLE: _______ ___ Market

You try one

Widget Demand Schedule

Price QuantityDemanded

5 10

4 17

3 26

2 38

1 53 Demand curve reason ?

D

Law of DemandLaw of Demand: As price declines, quantity demanded

increases. As price increases, quantity demanded decreases

Law of Demand: P Therefore Q demand P Therefore Q demand

Demand curve always slopes down

A linguistic problem

• Does P$ change the actual demand of a good?

• NO, P$ change only changes quantity demanded

• “thinking on the margin”

• Chicken exampleD

D

Consumer SurplusConsumer surplus is the difference between the

amounts people would willingly pay for various amounts of specific goods and the amounts they do pay at market prices.

Closure

• Tell your partner how large, if any, was your consumer surplus.

Demand Curves assignment

• Due start of class Friday• I won’t be here on Thurs, you will have an

in class reading, but rest of time to work