Results

Make tables to chart the demand for different goods- the amount that was sold each week Draw a graph for each product which shows the supply and demandRemember to label the graph and put the price on the Y (vertical) axis and the number of each product on the X (horizontal) axis.

Questions
1) what would you normally expect the relationship between price and quantity demanded to be? 2) Do you think a demand curve would therefore be upwards or downwards sloping? 3) Why might demand for a product decrease as price increases? (think of examples) 4) Why might the demand for a good decrease as incomes rise? (think of a couple of examples) 5)Why would quantity supplied increase as prices rise? 6) What would dictate the price which a supplier chooses to sell at?

What is Demand?
You should be able to Derive a market demand curve Explain movements along a demand curve Discuss factors that affect demand Key Concepts Demand curve Demand Schedule The Law of demand Effective demand Latent demand Extension of demand Contraction of demand Shift in demand

Definition of Demand
The quantity of a good or service that consumers are willing and able to purchase at any given price in a given time period

Different Types of Demand

Effective Demand When consumers desire to buy a product is backed up by an ability to pay for it They must have sufficient real purchasing power Latent Demand When there is willingness to purchase a good, but where the consumer lacks the real purchasing power to be able to afford the product

The Law of Demand

There is an inverse relationship between the price of good X and the quantity demanded of good X

The Demand Curve

Price

P2

P1

P3 Demand

Q2

Q1

Q3

Quantity Demanded

Example: Cameras
If the price of a cameras decreases, more will be demanded. There is said to be a change in quantity demanded in this case an extension of demand. And inversely if the price of cameras increases, less will be demanded a contraction of demand.

A contraction of demand
Price

P2

A contraction of demand due to a higher price

P1

P3 Demand

Q2

Q1

Q3

Quantity Demanded

An expansion of demand
Price

P2

P1

An expansion of demand due to a lower price

P3 Demand

Q2

Q1

Q3

Quantity Demanded

The relationship between price and quantity demanded

A change in the price of the product itself will lead to a change in the quantity demand of a product This is known as a movement along the curve;
An extension of demand if the prices falls, ceteris paribus A contraction of demand if the price rises, ceteris paribus

On your whiteboards
1) What causes extensions/contractions in demand 2) How many factors can you remember that would cause a shift in the demand curve 3) What does it mean if the demand curve shifts: At every price level more/less will be demanded.

Determinants of Demand
Income The price of other products
Substitutes Complements

Tastes Size of the population Changes in the age structures of the population Changes in income distribution Government policy changes Seasonal changes

An outward shift in demand

A rise in the real incomes of consumers An increase in the price of a substitute good (i.e. a competing product) A fall in the price of a complementary good A change in consumers preferences towards the good An increase in the size of the total population A fall in interest rates A rise in consumer confidence Social changes which affect total demand for a product

Shifts in Demand
Price Decrease in Demand Increase in Demand

P1

D3 Q3 Q1 Q2

D1

D2

Quantity Demanded

Example: Bowler Hats

When there is a change in one of these other determinants of demand we say there is a either an increase or decrease in demand For example if bowler hats come back into fashion, there will be a greater demand for them. Demand will shift to the right and more bowler hats will be demanded at all price levels.

Movements or Shifts in Demand

It is vital you remember; that a change in the price of the good being considered causes a movement along a curve a change in the quantity demanded, either an extension of contraction. And that a change in any of the other determinants of demand will always lead to a shift in demand, either left or right.

Sketch a diagram showing what would happen to the demand for Mars bars in China if
A) the price of twix decreases B) The Chinese government increases income tax C) Research has been completed showing that you are 30% more likely to keep a girlfriend if you buy her chocolate D) Justin Bieber and the Wondergirls were seen eating Mars Bars E) Mars owners want to make more profit and increase the price F) Jenny Lou introduces a deal giving away a free coke with every Mars Bar G) Hu Jintao announces that the Chinese economy will grow 5% this year H) Hyundai closes down a factory in Shandong and sends workers from Korea home I) There is a hike in import taxes on all Nestle products

Investigating Demand for Palm Oil

Task:
1) Note down all relevant statistics regards a) Palm oil production b) Palm oil consumption 2) What advantages have accrued to Malaysia as a result of Palm Oil production? 3) What are the dangers on over-reliance on this growth industry for Malaysia?