Introduction:

Adolescents as a group play an important part in total consumer spending. For this reason, it is important that they learn to analyze their spending habits and recognize factors that influence their behavior. This lesson reviews the law of demand, demand, and quantity demanded and introduces the non-price determinants of demand. These are the factors held constant when establishing the demand for a product. They include: number of consumers in the market, consumer tastes and preferences, consumer income, and prices of related goods (complements and substitutes).

Group Size: Whole class

Learning Objectives:

Students will:

• Define quantity demanded.
• Define demand.
• Identify an increase or decrease in a graph.
• Predict an increase or decrease in demand when given pertinent information.
• Explain what causes a shift in demand.
Materials:

Students use the demand schedule for Bubble Soda to answer questions.

Bubble Soda Display graph - http://www.econedlink.org/lessons/popup.php?lesson_number=550&&flash_name=em550_graph4.swf

Display graph for Bubble Soda with demand curve labeled demand.

For closure, instruct students to complete the true/false quiz

This evaluation is used to assess students understanding of the concepts introduced in this lesson.

Procedures:

Review the concept of demand. Ask students: What does quantity demanded mean?
[The amount of a good or service people are willing and able to buy at a particular price, other things being equal.]

Instruct students to answer the multiple choice questions using the demand schedule for Bubble Soda. Review with students the answers to the following questions.

What is the quantity demanded at a price of \$1.00? [5]

What is the quantity demanded at a price \$.25? [20]

As price goes down, what happens to the quantity demanded? [increases]

As price goes up, what happens to the quantity demanded? [decreases]

Remind students that the relationship between price and quantity demanded is inverse and is called the Law of Demand. Demand is the relationship between various prices and the quantities consumers are willing and able to buy during some time period, holding all other things constant. Demand is the entire schedule, not a single price and quantity demanded from the schedule. Demand is the entire schedule.

Tell students that the demand schedule can also be displayed as a graph. Direct students to answer the questions using the demand graph for Bubble Soda.

Review with students their answers to the following questions:

Part 2

Assign the students to study the demand graph for skateboards and answer the questions. Review student answers.

Part 3

Review with students the non-price determinants that cause a change in the quantity demanded at each and every price, in other words, a change in demand.

Non price determinants include:

Display graph for Bubble Soda with demand curve labeled demand.

Assign the students to use the Bubble Soda example and determine how demand would change and why for each of the examples below. Review students answers.

Which of the following demand shifters caused this change in demand? Change in the number of consumersChange in consumer tastes and preferencesChange in consumer incomeChange in the price of a substitute goodChange in the price of a complementary good

[Change in consumer taste and preference. Advertising resulted in a change in consumer taste and preference for Bubble Soda. Due to advertising, consumers wanted more Bubble Soda at each and every price.]

If students receive an increase in their allowance, what do you think would happen to the quantity demanded of Bubble Soda at \$1.00? \$.75? \$.50? \$.25? Would it increase or decrease?

[Increase The quantity demanded at each and every price would increase. In other words, demand would increase.]

Which of the following demand shifters caused this change in demand? Change in the number of consumersChange in consumer tastes and preferencesChange in consumer incomeChange in the price of a substitute goodChange in the price of a complementary good

[Change in consumer income. An increase in allowance results in a change in consumer income. An increase in income results in increase in the quantity demanded at each and every price.]

If Bubble Soda was introduced in another country and became popular, what do you think would happen to the quantity demanded of Bubble Soda at \$1.00? \$.75? \$.50? \$.25? Would it increase or decrease?

[Increase. The quantity demanded at each and every price would increase. In other words, demand would increase.]
Which of the following demand shifters caused this change in demand? Change in the number of consumersChange in consumer tastes and preferencesChange in consumer incomeChange in the price of a substitute goodChange in the price of a complementary good [Change in the number of consumers. Demand for Bubble Soda increased because more consumers are in the market for Bubble Soda.]

If the drinking of Bubble Soda was linked to tooth decay and its popularity decreased, what do you think would happen to the quantity demanded of Bubble Soda at \$1.00? \$.75? \$.50? \$.25? Would it increase or decrease?

[Decrease. The quantity demanded at each and every price would decrease. In other words, demand would decrease.]

Which of the following demand shifters caused this change in demand? Change in the number of consumersChange in consumer tastes and preferencesChange in consumer incomeChange in the price of a substitute goodChange in the price of a complementary good

[Change in consumer taste and preferences. The report that Bubble Soda causes tooth decay changes consumer tastes and preferences.]

If the price of Bugle Chips (a complement to Bubble Soda) decreases, what will happen in the market for Bubble Soda? Would it increase or decrease?
[Increase. Demand for Bubble Soda will increase because the price of a complementary good decreased.]
Which of the following demand shifters caused this change in demand? Change in the number of consumersChange in consumer tastes and preferencesChange in consumer incomeChange in the price of a substitute goodChange in the price of a complementary good

[Change in the price of a complementary good. Bubble Soda and Bugle Chips are complementary goods. When the price of Bugle Chips decreases, the demand for Bubble Soda increases.]

If the price of Too Cool Cola (a substitute for Bubble Soda) decreases, what will happen in the market for Bubble Soda? Would it increase or decrease?

[Decrease. Demand for Bubble Soda will decrease. In the market for Bubble Soda consumers want less Bubble Soda at each and every price.]
Which of the following demand shifters caused this change in demand? Change in the number of consumersChange in consumer tastes and preferencesChange in consumer incomeChange in the price of a substitute goodChange in the price of a complementary good [Change in the price of a substitute good. Demand for Bubble Soda will decrease because the price of a substitute good decreased. In the market for Bubble Soda consumers want less Bubble Soda at each and every price.]

Conclusion:

Remind students that in this lesson they reviewed the law of demand; they learned how price changes affect the amount of a good or service consumers are willing and able to buy.

They also learned about the non-price determinants of demand and how non-price determinants result in a change in demand. Review that a change in demand means that the amount consumers are willing and able to buy changes at each and every price. Non-price determinants are sometimes called demand shifters.

For closure, instruct students to complete the true/false quiz. Review students answers.

Schools across the country stop using textbooks. Demand for textbooks will decrease. [True] A law is passed guaranteeing students ages 10 and older a minimum allowance of \$25.00 per week. Demand for compact discs will decrease. [False] Doctors have obtained excellent results using vitamin E to cure acne. Demand for Vitamin E will decrease. [False] The price of Bubble Soda drops. The drop in price has no effect on demand for Bubble Soda. [True] The price of Bola Cola (a substitute for Bubble Soda) increases. Demand for Bubble Soda will increase. [True] If the price of peanut butter (a complement for jelly) increases, the demand for jelly will decrease. [True]Which of the following would not result in an increase in demand? Increase in incomeIncrease in number of consumers in the marketIncrease in price of a substituteIncrease in price of a complement [Increase in price of a complement]

Assessment:

Instruct students to complete the multiple choice evaluation Review students answers.

1. Blue jeans are a popular consumer good with teenagers. Which of the following would cause the demand for blue jeans to decrease?
• Schools across the country establish a dress code that prohibits wearing blue jeans to school.
• The price of blue jeans rises.
(For each headline below, determine if there will be a change in demand or quantity demanded in the identified market and if this change will result in an increase or decrease in demand or quantity demanded.) 2. Pete's Pizzeria increases the price for a small pizza What kind of change will occur in the market for Pizza Heaven's small pizza?

• Demand increases
• Demand decreases
• Quantity demanded increases
• Quantity demanded decreases
Quantity demanded increases

3. Gasoline Prices Rise What kind of change will happen in the market for gasoline market?

• Demand increases
• Demand decreases
• Quantity demanded increases
• Quantity demanded decreases
Quantity demanded decreases

4. Consumers lose weight by eating jelly beans What kind of change will happen in the market for jelly beans?

• Demand increases
• Demand decreases
• Quantity demanded increases
• Quantity demanded decreases
Quantity demanded increases

5. Hamburger goes on sale What kind of change will happen in the market for hamburger buns?

• Demand increases
• Demand decreases
• Quantity demanded increases
• Quantity demanded decreases
Demand increases

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