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02 tues demand consumer surplus
This document provides an overview and lesson plan for a class on the law of demand and consumer surplus. It includes: 1) An introduction to the topic of the day - the law of demand and why it is important to understand consumer demand. 2) A definition of demand as the amount willing and able to be bought at various prices. 3) Instructions to create a demand schedule and supply/demand graph with proper labels as an example. 4) A definition of the law of demand that as price decreases, quantity demanded increases, and vice versa. 5) An explanation that changes in price do not actually change demand but rather the quantity demanded at the margin. 6) A
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02 tues demand consumer surplus
- 1. Bellringer, As always,get out your notebook In your notes: How much would you be willing to pay for this computer? (what would be the most you would be willing to pay)
- 3. Write answers onboard • Factors might change our answers? • Reading assignment: Ch 4 Mankiw, due by Mon • Your choice: annotate & show me • OR on a paper, A.4 examples from real life of concepts B.3 ways to test Mankiw’s ideas (simulations, research) C.2 or more questions you have about the text
- 4. Today • Topic: Lawof Demand and Consumer Surplus • Why important: It’s the consumption side of our economy
- 5. What is “demand”? •The amount of a good or service that a consumer is willing and able to buy at various prices during a given time period
- 6. Create Demand Schedule PriceQuantity Demanded Graph on board Show proper labels
- 7. Proper Economics Supply/Demand Graph Price $$$$ P$ Quantity #of goods/service Q TITLE: _______ ___ Market
- 8. You try one WidgetDemand Schedule Price Quantity Demanded 5 10 4 17 3 26 2 38 1 53 Demand curve reason ? D
- 9. Law of Demand Lawof 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
- 10. A linguistic problem •Does P$ change the actual demand of a good? • NO, P$ change only changes quantity demanded • “thinking on the margin” • Chicken example D
- 12.
- 13. Consumer Surplus Consumer surplus isthe difference between the amounts people would willingly pay for various amounts of specific goods and the amounts they do pay at market prices.
- 15. Closure • Tell yourpartner how large, if any, was your consumer surplus.
- 16. Demand Curves assignment •Due start of class Friday • I won’t be here on Thurs, you will have an in class reading, but rest of time to work