Demand

Understanding Demand & The Demand Curve Shifts

What is Demand? At your tables write a definition for

demand along with an example. Then send one member from your group to the board to write down your definition. What, if anything, do all of the definitions

have in common? How are they different?

What is Demand? It is the willingness and ability of buyers to

purchase different quantities of a good at different prices during a specific period of time. Willingness to purchase - a person’s want or

desire for a good Ability to purchase - a person who has the money

to pay for a good Both willingness and ability need to present for a

good or no demand exists.

Law of Demand It is a law stating that as the price of a

good increases, the quantity demanded of the good decreases, and that as the price of a good decreases, the quantity demanded of the good increases.

If P then Qd

If P then Qd

Law of Demand

Price(P)

Quantity Demanded (Qd)0

Demand Schedule & Demand Curve Demand Schedule - a numerical

representation of the law of demand Demand Curve - a graphical

representation of the law of demand

Change in Demand Demand for a good or service can rise

or fall. This causes a shift in the demand

curve; it either moves to the right or left. If demand increases, then the demand

curve shifts rightward If demand decreases, then the demand

curve shifts leftward

Change in Demand

Price($/lb)

Quantity demanded of chicken (lbs)

0 5 10 15 20

$1

$2

D1

D2

D3

Change in Demand Changes in 5 main factors can cause a

change in demand Income - as income changes a person may buy

more or less of a good or service Preferences - affect how much of a good or

service a person will buy Prices of Related Goods - either substitutes or

complements Number of Buyers - more, higher demand; less,

lower demand Future Price

Change in Quantity Demanded

Price causes the change in Quantity Demanded.

It causes a shift along the curve; while the curve stays in the same place on the graph

Change in Quantity Demanded

Price($/lb)

Quantity demanded of chicken (lbs)

0 5 10 15 20

$1

$2

D1

B

A