Law Of Demand

Made by….

Manesh Kumar Ahuja

Demand• Supply/Demand

• Let’s look at Demand First

• Demand = how much a consumer values a good or service during a certain time

• in other words, how much are customers willing to pay

Why Demand ?

SATISFACTION

NEED

WANTS

DEMAND

PURCHASE

Demand Schedule Cookies

Price Quantity Demanded/Day

$0.50 5

$1.00 4

$1.50 3

$2.00 2

$2.50 1

$3.00 0

Demand Schedule Cookies

Price QD*Day

$0.50 5

$1.00 4

$1.50 3

$2.00 2

$2.50 1

$3.00 0

$

Quantity

(0,3)

(1,2.5)

(2, 2)

(3,1.5)

(4, 1)

(5, .5)

The Demand Curve

You try one

Widget Demand Schedule

PriceQuantity

Demanded

5 10

4 17

3 26

2 38

1 53

D

Law of DemandLaw of Demand: As price declines, quantity demanded

increases. As price increases, quantity demanded decreases

Law of Demand: P Therefore Q demand

P Therefore Q demand

Demand curve always slopes down

Description

• Law of demand explains consumer choice behavior when the price changes. In the market, assuming other factors affecting demand being constant, when the price of a good rises, it leads to a fall in the demand of that good. This is the natural consumer choice behavior. This happens because a consumer hesitates to spend more for the good with the fear of going out of cash.

Law of Demand at work

• Goods/Services that price changes cause changes in Quantity demanded

Example of Law of Demand

D

Think about demand of stocks

• Lower prices, more shares to buy

• As price declines….

How To know About Demand Increase?

Analyze some recent purchases

3. list 3 goods/services that consumers have a very high quantity demanded

4. List 3 goods/services with high quantity demanded if you have a child

5. List 3 good/services where you, personally buy less of it when it gets more expensive

Demand Curve Experiment

• Conduct a demand curve experiment

• Choose 1 good (snickers bars, Cold drinks,)

• Make up 5 price points

• Survey 3 people and find out their demand

• Graph the 3 demand curves on the same graph

• Write an explanation of how the experiment shows the law of demand in action AND how a company might use this information

Thank You…