homework: none frontpage: do you think you can have an effect on the price of something?
TRANSCRIPT
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Homework: None
FrontPage: Do you think you can have an effect on the price of something?
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ECONOMIC SYSTEMS
or…
Capitalists do it with an invisible hand…
Chapter 2, Section 1
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COMMAND ECONOMY
Or, …Do as I say, not as I don’t say…
Chapter 2, Section 2
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MARKET ECONOMIE
S
Or…It’s Good to Be the King
Chapter 2, Section 2
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MODERN ECONOMIES
IN A GLOBAL AGE
Or…Going to Your Happy Place
Chapter 2, Section 4
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WHAT WERE OUR RESULTS?
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DEMANDOr…My Pet Rock Died.
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WHAT IS “DEMAND”?
• Demand : the desire to have some good or service and the ability to pay for it.• It isn’t enough for
consumers to desire a good, if they cannot afford it.
• It isn’t enough for consumers to be able to afford a good, if they don’t really desire it.
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THE LAW OF DEMAND
• When the price of a good of service falls, consumers buy more of it. (P, then QD)
• As the price of a good or service increases, consumers buy less of it. (P, then QD)
• Quantity demanded and price have an inverse (opposite) relationship.
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WHAT CREATES “DEMAND”?
http://abcnews.go.com/Nightline/video/silly-bandz-latest-fad-11686769
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HOW MIGHT DEMAND BE CREATED FOR THE FOLLOWING ITEMS? Pirate playoff tickets?
Apple iPhone 6?
Peters Township homecoming tickets?
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FOR WHAT REASONS MIGHT DEMAND FOR THESE ITEMS CHANGE? Pirate playoff tickets?
Apple iPhone 6?
Peters Township homecoming tickets?
http://abcnews.go.com/Nightline/video/silly-bandz-latest-fad-11686769
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Homework: None
FrontPage: How are demand and price related?
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THE LAW OF DEMAND
• When the price of a good of service falls, consumers buy more of it. (P, then QD)
• As the price of a good or service increases, consumers buy less of it. (P, then QD)
• Quantity demanded and price have an inverse (opposite) relationship.
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DEMAND SCHEDULES
• A demand schedule is a table that shows how much of a good or service an individual consumer is willing and able to purchase at each possible price.
•A market demand schedule shows how much of a good or service all consumers are willing and able to buy at each possible price.
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EX. PETER’S DEMAND SCHEDULE
Price per DVD ($)
Quantity Demanded
30 025 120 215 310 45 7
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EX. QUAHOG’S (MARKET) DEMAND SCHEDULE
Price per DVD ($)
Quantity Demanded
30 5025 7520 10015 12510 1755 300
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DEMAND CURVES• A demand curve is a graph that shows how much of a good or service an individual consumer is willing and able to buy at each price.
• A market demand curve is a graph that shows how much of a good or service all consumers in a market are willing and able to buy at each price.
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EX. PETER’S DEMAND CURVE
Pri
ce p
er
DV
D (
in
dolla
rs)
5
15
20
25
30
10
1 2 3 4 5 6 7Quantity Demanded of DVDs
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EX. QUAHOG’S DVD DEMAND CURVE
Pri
ce p
er
DV
D (
in
dolla
rs)
5
15
20
25
30
10
50 100 150 200 250 300
Quantity Demanded of DVDs
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WHY DO DEMAND CURVES SLOPE DOWNWARD?
•The Law of Diminishing Marginal Utility – the benefit from using each additional unit of a good or service during a given time period tends to decline as each is used.