Demand equation and demand curve

• Economie
• Middelbare school
• vwo
• Leerjaar 3

Demand

Demand curve

Demand equation

Change in demand

Shift of the demand curve

0

What is a substitute product?

Substitute product

A product that fulfills the same need

Need for a beverage:

Milk/Juice/ Tea

Whatch a movie:

Theatre/Netflix

Inverse relationship 

When the price of milk decreases, the quantity of milk demanded increases

Substitute effect

When the price of milk increases, consumers will replace milk with a substitute product like juice

Juice becomes relatively cheap

Think of an example of two substitute products

Exercise: Go to page 40

Read the theory 'The demand for goods'

Write down the demand-equation for tickets for the 

One Direction concert

Qd = ..............................

What does Qd stand for?................

What does P stand for?...............

Do exercise 1 and 2

Answers to exercise 1 A,B and C

A. P = 20 --> Q d = -100 X 20 + 24,000 = 22,000 tickets

B. P = 80 --> Qd = -100 X 80 + 24,000 = 16,000 tickets

C. The Ziggo Dome has 17,000 seats. So: Q d = 17,000

-100 P + 24,000 = 17,000

              -24,000         - 24,000

            -100 P = - 7,000 

                    P = -7,000/ -100 = 70

Answer to exercise 1 D

The concert was sold out in ten minutes. Apparently demand was much larger than supply.

So probably the price was a lot lower than € 70 

Drawing the curve

The price is on the vertical axis

The quantity is on the horizontal axis

!!!!!

And now: exercise 2

Exercise

exercise	Source	Answers
3	2	Answersheet
4	3 and 4	Answersheet
5	5	Answersheet

Exercise 3

A  P = 20 --> Q d = -0.25 X 20 + 275 = 270 correct 

P = 50 --> Q d = -0.25 X 50 + 275 = 262.5  Not the right formula

B    P = 20 --> Q d = -0.25 X 20 + 162.5 = 157,5 Not ...

C    P = 20 --> -4 X 20 + 275 = 195 Not ...

D    P = 20 --> - 4 X 20 + 350=  270 Correct

P = 50 --> - 4 X 50 + 350  = 150 Correct

D      Q d = - 4 P + 350 is the correct formula

Change in demand

As the price increases from € 25 to € 26.50 demand decreases from 400,000 till 340,000

Shift of the demand curve

Shift to the right: there is more demand at every price

Causes:

• Increase in income
• Number of consumers increase
• Price increase substitute product (Zoo is more expensive
• Price decrease of complementary product (price decrease parking lot/ meal prices at restaurant)

Complementary product

A product that is closely related to another product. You use them together

Playstation 5 + games

Printer + ink cartridges

Which product is NOT a free good

1. Wind
2. Sunlight
3. Street lighting
4. The air we breathe

Choose the best description of the word self-sufficiency

1. Buying products with your own money
2. producing product and sell them
3. Producing products for your own use
4. Taking care of your own business

study

Study the words of section 2,3 and 4 on page 37

Learn them by heart

Close the book

Person A is going to describe the words. 

Person B has to answer by using the right word