### ECO 201 Cram Kit Bundle

Opportunity Cost & PPF
Supply & Demand
Elasticity
Surplus
Tax Incidence & DWL
Price Controls
Externalities
Types of Goods
Total Costs
Per-unit Costs
Market Structures

# Demand

Let's say Chad has a few pairs of white sneakers. Chad has a pair of Conserves for the gym, a pair of Air Force 1s that he likes to keep clean, and some white Adidas he wears to the bars and gets dirty.

If all white sneakers were \$10 dollars, how many pairs of shoes would Chad buy? My guess is Chad would not mind buying 5 pairs. If white sneakers were \$150 per pair he would probably not buy more than 2 pairs. If white sneakers were \$200 he would only buy a pair.

There is clearly a relationship between the price of white sneakers and how many Chad buys.

We can create a Demand Schedule which shows the relationship between the price and the quantity demanded

On our Y-axis is price. This price is the price of one unit of the good or service. On our X-axis is Quantity Demanded. This is the different quantities of white sneakers Chad could potentially want.

Using our Demand Schedule lets plot each point!

If a pair of white sneakers cost \$10, Chad will want 5 pairs. This point is plotted as a red dot below.

If a pair of white sneakers cost \$150, Chad will want 2 pairs. This point is plotted as a red dot below.

If a pair of white sneakers cost \$200, Chad will want 1 pair. This point is plotted as a red dot below.

This results in the following linear relationship!

Notice how the Demand curve is downward sloping. This shows a very key economic concept: Law of Demand!

The Law of Demand states that holding everything constant, when the price of a product falls, the quantity demanded increases