Скачать презентацию Demand AG BM 102 Talk is cheap

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Demand AG BM 102

Talk is cheap. Supply exceeds Demand.

Background • • First question is what can you sell? How much? What price? Related questions – What happens over time? • How about related products?

Demand - A schedule of the quantities of product that consumers will buy at various prices

A Demand Schedule • Is a price- quantity relationship • Assumes other things, such as income, are constant • Is for a fixed period of time – per month, per year, etc.

An Example - Beef Price/lb. \$5. 00 Quantity lb. /cap. 50 \$3. 75 Quantity lb. /cap. 75 \$4. 75 55 \$3. 50 80 \$4. 50 60 \$3. 25 85 \$4. 25 65 \$3. 00 90 \$4. 00 70 \$2. 75 95

Points about Graphs • Price is on the vertical axis • Quantity is on the horizontal axis • Since consumers see prices and choose quantities, Q = f(P) • This is opposite of usual graphs in algebra where the dependent variable is on the vertical axis

Why do we have demand curve sloping downward?

Downward Sloping Demand • For ordinary goods, the additional unit is worth less – if you have eaten six donuts, how much is the seventh worth to you? • For ordinary goods, a sale induces consumers to buy more.

What happens when the prices of a related good changes?

Two choices • The consumption of beef goes down when the price of chicken goes down – substitute goods • The consumption of beef goes up when the price of hamburger buns goes down – complementary goods (good consumed together)

Price Chicken Falls Price of Chicken

What if income changes? • Depends on good • Ordinary goods – consumption rises • Inferior Goods – consumption falls bologna • Size of change depends on the characteristics of the good

Income Falls

Tastes and Preferences • • Affect demand Health news New competing products Changes in lifestyle