### ECO 202 Cram Kit Bundle

Unemployment
Types of Unemployment
Unemployment Measures
Okun’s Law
Misery Index
Economic Measures
Consumer Price Index (CPI)
Gross Domestic Product (GDP)
Gross National Product (GNP)
Potential Output
Money Supply
Stock vs. Flow
Economic Models
Supply & Demand
Aggregate Supply & Aggregate Demand
Economic Gaps
Interest Rates
Interest Rates
Loanable Funds
Comprehensive

# 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