Demand in Economics How the consumer influences how I make money Law of Demand

Demand in Economics

• How the consumer influences how I make money

Law of Demand

• Part 1. As PRICE increases, DEMAND decreases
• Part 2. As PRICE decreases, DEMAND increases

• Price goes up

• Demand goes down

• Demand goes up

• Price goes down

• THEN

• THEN

Demand Curve

• A graph that illustrates the demand for a product
• It shows how much consumer desire for a product changes as the price changes

Market Demand Curve: This curve illustrates the quantities of apple juice demanded at each price ay all consumers in the market.

Price of a bottle of Apple Juice	Quantity demanded per week
$0.75	800
$1.00	650
$1.25	500
$1.50	350
$1.75	200
$2.00	50

Elasticity of Demand

• The degree to which changes in price cause changes in demand
• or
• If we change the price, will demand change a lot or a little?

Elastic Demand

• If Demand for a good is very sensitive to changes in price, the demand is ELASTIC
• Or
• If prices changes a little bit, demand will change a lot!

Example of Elastic Demand

• Price of pizza goes up even a little bit, demand goes down a lot.