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HOMEWORK
Demand Practice
AGENDA
Warm-Up
The Law of Demand
Elasticity of Demand
Graph of
#ECONGOALS DEMAND
I can demonstrate the efect of demand on decision-
in demand.
I can be able to identify factors that afect elasticity.
I can be able to define elasticity of demand.
I can be able to identify factors that afect elasticity of
demand.
I can be able to explain why firms want to know the
UNDERSTANDING DEMAND
Law of Demand: when a goods price is lower, consumers will
buy more of it. When the price is higher, consumers will buy
less of it.
Substitution Efect:
Examples?
incomes increase.
Inferior Goods: an increase in income would lead
to less demand for these goods: Mac/cheese,
cereal, used cars, etc.
ELASTICITY OF DEMAND
Demand curves are accurate as long as there are no
ELASTICITY
Elasticity of Demand: how drastically
Necessities
Elastic: small price increase will cause you to buy much less
Knowing the elasticity of demand for a product will enable a firm to more
accurately calculate the changes in revenue caused by changes in prices.
If demand for a product is inelastic, raising prices has less significant impact
on revenue, and indeed raising prices will increase total revenue.
REVIEW
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OBJECTIVES - SUPPLY
I can be able to explain the law of supply.
I can interpret a supply graph using a supply schedule.
I can be able to explain the relationship between
SUPPLY
What is the law of supply?
When the price of a product goes up, suppliers will ofer more
supplied.
ELASTICITY OF SUPPLY
What is the elasticity of supply?
KEY FACTOR
Time, especially for goods
Goods are usually inelastic in the short term, but elastic over time.
Supply of services are usually elastic in both the short and long
term.
SUPPLY
When we talked about demand, we said that movement along
BOTH CURVES
Supply = positive slope=direct relationship
OBJECTIVES
I can be able to explain how supply and demand create
market in disequilibrium.
What is disequilibrium?
When quantity supplied does not equal
DISEQUILIBRIUM
Excess demand = quantity