Agenda
Bellringer
Review questions
Notes: Graphing and Shifting of Demand Curve
Independent work (worksheet)
Objective
Students will identify how demand shifts by completing a worksheet
Review Questions
 What is demand?

Desire to have something AND the ability to pay for it
 What is the Law of Demand?

When price increases, demand decreases
 What is a demand schedule?
 A list of how many people would purchase a produce at various prices
Demand
Graphing Demand
Graphs for supply and demand will ALWAYS:
List prices on the vertical axis
List quantity demanded on horizontal axis
Graphing Demand
When a demand schedule is graphed, with all factors constant, it will always look like
this:
This line is called a
demand curve….
Changes in Demand
Any change in demand due to price is movement ALONG THE CURVE
Changes in Demand
Changes in things OTHER than price, cause the demand curve to SHIFT
The curve will shift inward if there is a decrease in demand
The curve will shift outward if there is an increase in demand
Changes in Demand
$6
$6
$5
$5
$4
$4
Price per Widget
Price per Widget
Demand
Increase
Curve
in Demand
for Widgets
$3
•As an example, suppose
consumer income
increases. The demand for
Widgets at all prices will
increase.
$3
Orginal Demand Curve
Demand Curve for Widgets
$2
$2
$1
$1
$0
•Several factors will
change the demand for
the good (shift the entire
demand curve)
New Demand Curve
$0
0
2
0
24
4
6
6
8 8
Quantity
Quantity
Demanded
Demanded
of of
Widgets
Widets
10 10
12
12
14
Changes in Demand
$6
$6
$5
$5
$4
$4
Price per Widget
Price per Widget
Demand
Decrease
Curve
in Demand
for Widgets
$3
$2
•Demand will also
decrease due to changes
in factors other than price.
•As an example, suppose
Widgets become less
popular to own.
$3
Demand Curve for Widgets
$2
$1
$1
$0
0
$0 2
0
2
4
6
4
8
Quantity
Demanded6 of Widgets
Quantity Demanded of Widgets
8
10
10
12
12
Original Demand Curve
New Demand Curve
What causes shifts?
BITER!!!
B (uyers #)
I (ncome)
T (astes)
E (xpectations)
R (elated goods)
Buyers (number of)
The number of people in a given market can increase or decrease
Example:
Population increases or decreases for some reason
Think: Florida in winter – does population increase or decrease? What does that do to
Demand?
Income
How much (or little) income you plan on making determines your spending habits
Examples:
Construction worker knows he is getting laid off – increase or decrease in demand?
Tastes
Whatever is in style right now, has higher demand. Advertisements affect demand.
Example: Is there high or low demand for overalls and jean jacket combos? Double
denim?
Expectations
Knowing that the costs of certain items will increase at different times affects demand
Consider: What time of year would you buy a boat?
Related Goods
The cost and availability of substitute and related goods affect demand
Example: Hot dogs are impossible to find. The only hot dog plant in America has been
shut down because of unsanitary conditions. What happens to the demand for
hotdog buns?
Ready to practice?
First – together
Then – on your own
Agenda
Bellringer
Review Questions
Finish/review demand worksheet
Elasticity of Demand (Notes)
Video Clip: Elasticity of Demand
Textbook reading: Supply
Review Questions
What is the law of demand?
Price goes up, demand goes down
What are the determinants of demand?
Buyers (#), income, tastes, expectations, related goods
What do you label the vertical axis?
Price
What do you label the horizontal axis?
Quantity
Which way does the curve shift if there is an increase in demand?
Outward (right)
Which way does the curve shift if there is a decrease in demand?
Inward (left)
Demand worksheet
Take five minutes to finish demand worksheet from yesterday
We will review as a class
Video clip
Determinants of demand….
Elasticity of Demand
Elasticity of Demand: measure of how consumers react to a change in price
Not all shifts in demand are 100% true all the time. There is a gray area that is elastic
Like a rubber band, these situations are flexible
Inelastic
If an item is inelastic, it is NOT flexible. Demand DOES NOT CHANGE because of price
Tends to be needs not wants
Examples:
Fuel
Milk
Cars
Eggs
Propane
Elastic
Elastic demand is like a rubber band. It bends, expands, and contracts. Very flexible.
The demand for these goods WILL CHANGE BASED ON PRICE
Tends to be wants not needs
Examples:
Dunkin Donuts
Early bird specials
Candy
Textbook reading
Please read pages 148-150
Document all blue vocabulary words in your notes
Draw a supply curve and identify how it is different from a demand curve