Economics-Demand Theory

1. Demand Theory September 25, 2006

2. Short Quiz

4. Outline Basics of Demand Theory Demand defined Demand Schedule and Demand Curve Individual Demand and Market Demand Law of Demand Change in quantity demanded vs. change in demand- Non-Price determinants of Demand

7. Demand Schedule

9. The Demand Curve Quantity Price ($ per unit) Horizontal axis measures quantity (Q) demanded in number of units per time period Vertical axis measures price (P) paid per unit in dollars

10. The Demand Curve D The demand curve slopes downward demonstrating that consumers are willing to buy more at a lower price as the product becomes relatively cheaper and the consumer’s real income increases. Quantity Price ($ per unit) They intersect the quantity (X) axis, a result of time limitations and diminishing marginal utility. They intersect the quantity (Y) axis, a result of time limited incomes and wealth.

11. Example:

14. Demand Curve I D

15. Change in quantity demanded due to change in price I II D

19. Demand curve shifts to the right D

20. Demand curve shifts to the left D

22. Individual Market and Market Demand

23. End