Unit 2 lesson 2 presentation
- 2. Review: Change in QuantityReview: Change in Quantity DemandedDemanded Quantity Price D1
- 3. On to … Determinants of Demand
- 4. DETERMINANTS OF DEMAND Changes in income Changes in the prices of related goods Substitutes: goods that can replace one another Compliments: goods that are consumed together Changes in the size or composition of the population Change in price expectations Changes in tastes/preferences
- 5. Practice Problem #1 What would happen to the demand of pizza if you find out pizza causes heart disease? • Determinant? • Increase or decrease in demand?
- 6. Answer to Practice Problem #1 What would happen to the demand for pizza if you find out that pizza causes heart disease? • Determinant - A change in consumer tastes/preferences; consumer expectations • Decrease in demand
- 7. Practice Problem #2 What would happen to the demand of Nike shoes if it is the favorite shoe of many sports celebrities? • Determinant? • Increase or decrease in demand?
- 8. Answer to Practice Problem #2 What would happen to the demand of Nike shoes if it is the favorite shoe of many sports celebrities? • Determinant – A change in consumer tastes/preferences • Increase in demand
- 9. Practice Problem #3 •A new energy drink comes to market that does not have negative side effects (e.g., jitters, crashes). • Determinant? • Increase or decrease in demand of Red Bull?
- 10. Answer to Practice Problem #3 • A new energy drink comes to market that does not have negative side effects (e.g., jitters, crashes). • Determinant – A related good (substitute) • Decrease in demand of Red Bull
- 11. Practice Problem # 4 •Student allowances and the minimum wage for work increases. • Determinant? • Increase or decrease in demand of video games?
- 12. Practice Problem # 4 •Student allowances and the minimum wage for work increases. • Determinant – Income increase • Increase in demand of video games
- 13. Movement Along a Demand Curve Versus a Shift of the Curve • Remember there is a difference between quantity demanded and demand. • Markets never stand still, there are always outside factors that change the actual price of the good or how much is demanded altogether. • A change price creates a change in the quantity demanded, other things constant. ▫ This causes a movement along the demand curve. • A change in one of the determinants of demand causes a change in demand. ▫ This causes in a shift of a demand curve. Or a new curve.
- 14. What determinants would increase the market demand for pizza?
- 15. Determinants Increasing Demand • Increases in income • Increases in population • Increase in prices of substitute goods • Decrease in price of complement goods • Consumer expectation that prices will increase in the future • Improvement in taste • Increased consumer preferences
- 16. Determinants of increased demand change the story….. How so? Quantity demanded of pizza per week (by millions) Price of pizza 15 $15.00 20 $12.00 25 $9.00 30 $6.00 35 $3.00 --- $0.00 Quantity demanded of pizza per week (by millions) Price of pizza 9 $15.00 14 $12.00 19 $9.00 25 $6.00 30 $3.00 --- $0.00 Original Story New Story
- 17. 8 14 20 26 32 Millions of pizzas per week $15 12 9 6 3 0 Priceperpizza D1 How would determinants of increased demand change the picture of demand? b
- 18. 8 14 20 26 32 Millions of pizzas per week $15 12 9 6 3 0 Priceperpizza D1 Increased Market Demand for Pizza D2 fb
- 19. What determinants would decrease the market demand for pizza?
- 20. Determinants Decreasing Demand • Decreases in income • Decreases in population • Decrease in prices of substitute goods • Increase in price of complement goods • Consumer expectation that prices will decrease in the future • Deterioration of taste • Decreased consumer preferences
- 21. Determinants of decreased demand change the story….. How so? Quantity demanded of pizza per week (by millions) Price of pizza 5 $15.00 10 $12.00 15 $9.00 20 $6.00 25 $3.00 --- $0.00 Quantity demanded of pizza per week (by millions) Price of pizza 9 $15.00 14 $12.00 19 $9.00 25 $6.00 30 $3.00 --- $0.00 Original Story New Story
- 22. 8 14 20 26 32 Millions of pizzas per week $15 12 9 6 3 0 Priceperpizza D1 How would determinants of decreased demand change the picture of demand? b
- 23. b D2 Decreased Market Demand for Pizza 8 14 20 26 32 Millions of pizzas per week $15 12 9 6 3 0 Priceperpizza j D1
Editor's Notes
- #2: Arnold, Roger A. Economics In Our Time (Teacher's Edition). Grand Rapids: West Educational, 1999. McEachern, William A. Contemporary Economics. Mason, Ohio: Thomson South-Western, 2005.