CHAPTER 4
Demand
4.1 The Demand Curve
4.2 Elasticity of Demand
4.3 Changes in Demand
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CONTEMPORARY ECONOMICS: LESSON 4.1
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Consider
CHAPTER 4
Demand
 Why are newspapers sold in vending machines that
allow you to take more than one copy?
 How much do you eat when you can eat all you want?
 What cures spring fever?
 What economic principle is behind the saying, “Been
there, done that”?
 Why do higher cigarette taxes cut smoking by
teenagers more than by other age groups?
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CONTEMPORARY ECONOMICS: LESSON 4.1
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Objectives
LESSON 4.1
The Demand Curve
 Explain the law of demand
 Interpret a demand schedule and
demand curve
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CONTEMPORARY ECONOMICS: LESSON 4.1
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Key Terms
LESSON 4.1
The Demand Curve
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demand
law of demand
marginal utility
law of diminishing marginal utility
demand curve
quantity demanded
individual demand
market demand
CONTEMPORARY ECONOMICS: LESSON 4.1
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Demand
Demand indicates how much of a
product consumers are both willing and
able to buy at each possible price during
a given period, other things remaining
constant.
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CONTEMPORARY ECONOMICS: LESSON 4.1
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Law of Demand
The law of demand says that quantity
demanded varies inversely with price,
other things constant. Thus, the higher
the price, the smaller the quantity
demanded.
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CONTEMPORARY ECONOMICS: LESSON 4.1
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Law of Demand
Demand, wants, and needs
Substitution effect
Income effect
Diminishing marginal utility
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CONTEMPORARY ECONOMICS: LESSON 4.1
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Demand Schedule
and Demand Curve
Demand versus quantity demanded
Individual demand and market demand
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CONTEMPORARY ECONOMICS: LESSON 4.1
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Demand Schedule
a
b
c
d
e
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Price
per Pizza
Quantity Demanded
per Week (millions)
$15
12
9
6
3
8
14
20
26
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CONTEMPORARY ECONOMICS: LESSON 4.1
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Demand Curve for Pizza
Price per pizza
$15
12
9
a
b
c
d
6
e
3
D
0
8 14 20 26 32
Millions of pizzas per week
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CONTEMPORARY ECONOMICS: LESSON 4.1
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Individual Demand for Pizzas
(a) Hector
(c) Chris
$12
$12
8
4
8
4
8
4
Price
$12
dH
1 2 3
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(b) Brianna
Pizzas
(per week)
dB
1 2
CONTEMPORARY ECONOMICS: LESSON 4.1
dC
1
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Market Demand for Pizzas
(d) Market demand for pizzas
dH + dB + dC = D
Price
$12
8
4
1 2 3
12
6
Pizzas
(per week)
CONTEMPORARY ECONOMICS: LESSON 4.1
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