10-25-11 Goal 1: Why is the
demand curve shaped like it
is?
Why does the demand curve go downward?
Why is there a negative or inverse relationship between
price and quantity demanded?
1. Law of diminishing marginal utility- states that the
marginal benefit of using each additional unit of a
product during a given period will decline.
Example: Favorite Food
2. Income Effect the lower the price the more purchasing
power your money income has allowing you to buy
more than you could before
Example: Mom gives you $50 to buy 1 pair of jeans
3. Substitution Effect if a products price has fallen it has
seen as a "better deal" compared to similar products
Example: Butter vs. Margarine
Goal 2: Explain the difference between change in
quantity demanded and a change in demand
Change in Quantity Demanded -is an increase or decrease
Change in Q Demand or Change in Demand Per 8 Page 1
Change in Quantity Demanded -is an increase or decrease
in the amount demanded because of a change in price.
-Is shown by a movement along a demand curve
-The movement from point A to point B is an increase in
quantity demanded because of a decrease in price
-The movement from point A to point C is a decrease in
quantity demanded because of an increase in price
Change in Demand- occurs when something prompts
consumers to buy different amounts at every price.
-A change in demand shifts the whole demand curve
left (decrease) or right (increase)
Change in Q Demand or Change in Demand Per 8 Page 2
A shift right in the demand curve from D1 to D2
would be an increase in demand.
A shift left in the demand curve from D1 to D2 would be
a decrease in demand.
Exit Question: What is the difference between a change
in quantity demanded and a change in demand?
Change in Q Demand or Change in Demand Per 8 Page 3