Demand: the schedule of how much consumers are willing and able to buy at all possible prices in a given period of time.
Law of Demand: everything else being equal, more products will be demanded at a lower price than at a higher price.
Determinants of Demand factors: incomes, tastes, and preferences, the prices of substitute or complementary products, expectations for the future) that cause the demand for a product to change.
Demand Curve: graphical representation that shows the number of products that will be
demanded at various prices; a graphical representation that shows the relationship between different prices for a product and how much of it people will be willing to buy at each price.
Shift in Demand: increase or decrease in demand that results from a change in a determinant of demand for a product.
QUESTIONS:
What would happen to the number of “Kookies” that would be bought at each price as the result of each of the following events:
- Your weekly income went up $20?
- Your girlfriend or boyfriend developed a mad craving for “Kookies”?
- The drugstore down the street had a sale on candy bars at 10 cents each?
- You heard the price of “Kookies” was going up 25 cents next week?
What is Happening to the Demand for Canned Tuna?
Mary runs the only grocery store in a 12-block area of a large city. Many of her customers are elderly and don’t have much income. Mary sells lots of canned tuna fish. It isn’t too expensive, and it is a good source of protein. Mary charges 79 cents a can all the time, but she has noticed that her sales have changed from time to time.
Explain why the demand for tuna fish changed in each of the following situations.
- When hamburger went up 20 cents a pound, Mary sold about 50 more cans of tuna fish each day. WHY?
- Mary sells about 100 more cans of tuna fish a day at the start of a month than at the end of a month. WHY?
- For a few weeks after there was an article in the newspaper about how healthful tuna fish is, Mary’s sales increased 30 cans a day. WHY?
- There was a truck drivers’ strike and food deliveries were interrupted. Mary sold 100 cans more a day. WHY?
Take a look at the Demand Curve graph below. When cheeseburgers are listed at $2.00 each, the Store sells 10 in one day. When cheeseburgers are listed at $1.00 each, the store sells 30 in one day.
- If the price of cheeseburgers goes down to $.50 each, predict how many cheeseburgers the store would sell in one day and why.
- If the price of cheeseburgers goes up to $2.50 each, how many cheeseburgers should the store have on hand that day to sell?
- Suddenly, the price of beef goes up! What will happen to the price of cheeseburgers?
- The storeowner’s landlord raises his rent, and the cost of electricity rises. Will the cost of a cheeseburger be affected, and if so, how will it change?
- The storeowner gets a great deal on cheese for this month. Instead of paying $.10 per slice, the cost of cheese goes down to $.05 per slice. If you were the storeowner, what would you do to encourage your customers to buy more cheeseburgers?
