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…