The Demand

Curve
by: Ma'am Marie
 How many 12-inch
pizza do you buy each
week if the price is 120
pesos?90 pesos? 60
pesos?
DEMAND
It indicates how much of a product consumers are both WILLING
to able to buy at each price during a given time period, other
things constant.
You should think of demand as the AMOUNTS PURCHASED PER
TIME PERIOD at each price.
Also, notice the emphasis on WILLING and ABLE.
LAW OF DEMAND
This relation between price and quantity demand reflects an
economic law.
The law of demand says that quantity demanded varies inversely
or negatively, with price, other things constant.
Thus, the higher the price, the smaller the quantity demanded.
The lower the price, the greater the quantity demanded.
 SUBSTITUTION
EFFECT
The change in the relative price - the price of one good relative to the prices
of other goods can cause the substitution effect.
It is also called the other-things-constant assumption.
 INCOME EFFECT
MONEY INCOME - is simply the number of pesos you receive per period.
A fall in the price increases the quantity demanded.
 Diminishing
Marginal Utility
Marginal Utility
The satisfaction you derive from an additional unit of a
product.
For example, the additional satisfaction you get from a
second slice of pizza is your marginal utility of that slice.
Law of Diminishing
Marginal Utility
This law states that the more of a good an individual
consumers per period, other things constant, the
smaller the marginal utility of each additional unit
consumed.
How would you explain
the Law of Demand?
Demand Demand
Schedule Curve
A table that shows the quantity
demanded of a good or service
at different price levels.
A graphical representation of
the relationship between the
price of a good or service and
the quantity demanded for a
given time period.
Demand Schedule & Curve
Demand VS Quantity Demanded

QUANTITY DEMAND refers to a specific amount of the

good on the demand schedule or the demand curve,
whereas DEMAND refers to the entire demand schedule
or demand curve.
 INDIVIDUAL DEMAND &
MARKET DEMAND
INDIVIDUAL MARKET DEMAND
DEMAND The sum of the
The demand of an individual demands of
individual consumer. all consumers in the
market.
GRAPHING EXERCISE
ACTIVITY
The owners of a local shoe store surveyed their customers to
determine how many pairs of running shoes they would buy each
month at different prices. The results of the survey appear in the
demand schedule below. Use these data to draw a demand curve
for running shoes. Explain how your graph demonstrates the law
dimishing marginal utility.
Demand for Running Shoes
THANK
YOU!