What consumers are willing to pay for goods and services.

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What consumers are willing to pay for goods and services

Transcript of What consumers are willing to pay for goods and services.

Page 1: What consumers are willing to pay for goods and services.

What consumers are willing to pay for goods and services

Page 2: What consumers are willing to pay for goods and services.

Law of Demand

The lower the price, the more consumers want to buy

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Things that affect the law of demand:

• Income effect: the more you have the more you spend

• Substitution effect: if you can get a similar, substitute good that is cheaper.. You will

• Law of diminishing marginal utility: sometimes you get tired of a particular good and stop buying it

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Quantity Demanded

The exact amount

consumers want at a

certain price

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Plotting Demand

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Demand vs. Quantity DemandedDemand Quantity Demanded

What does

it look like?

Price (P)

Quantity

D

Price

Quantity (Q)

D1

P1

Q1

P2

Q2

D2

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DEMAND THE WHOLE CURVE

QUANTITY DEMANDED EACH DOT

In other words…

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NOW… you plot some

Demand Schedule for Hair Dryers

Price per Hair Dryer

Quantity Demanded

$40 0

$30 20

$20 40

$10 60

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Demand Schedule for Apples

Price per apple

Quantity Demanded

$4 20,000

$3 40,000

$2 60,000

$1 80,000

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Demand Schedule for Shoes

Price of Shoes

Quantity Demanded

$150 60

$120 120

$90 150

$60 180

$30 210

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Demand Schedule for Apples

Price per apple

Quantity Demanded

$4 20,000

$3 40,000

$2 60,000

$1 80,000

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Demand Schedule for Car Stereos

Price per stereo

Quantity Demanded

$500 500

$400 1000

$300 1500

$200 2500

$100 5000


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