1. Bellringer
As always, go get your notebook
How much would you be willing to pay for this
laptop computer? (what would be the most you
would be willing to pay)
MANKIW
CHAPTER 4 ALL WEEK

2. Write answers on board
• Factors might change our answers?

3. Today
• Topic: Law of Demand and Consumer Surplus
• Why important: It’s the consumption side of our
economy

4. 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

5. Create Demand Schedule
Price Quantity Demanded
Graph on board
Show proper labels

6. Proper Economics
Supply/Demand Graph
Price
$$$$
P$
Quantity
# of goods/service
Q
TITLE: _______ ___ Market

7. You try one
Widget Demand Schedule
Price
Quantity
Demanded
5 10
4 17
3 26
2 38
1 53 Demand curve reason ?
D

8. Law of Demand
Law 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

9. 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

11. D

12. Consumer Surplus
Consumer surplus is the difference between the
amounts people would willingly pay for various
amounts of specific goods and the amounts
they do pay at market prices.