substitutes income effect

Bellringer ½ sheet1. 3 items you will buy more of when you start making

$25,000/year or more

2. 3 items you will buy less of when you start making $25,000/year or more

3. OPTIC for this graph:

4. Get out your notes

Changes to demand

Does Demand change when the price of a good changes?

Only the Quantity demanded changes with price

Review:What is the Q*D at

Price = $1.50?When Q*D is at 50,

what is the price?

Revenue max?

D

D

Demand changes over time

Demand Vocab “complements” – a good that is purchased with

another “substitutes” – a good which can be substituted for

another Substitution effect - Changes to prices of similar

goods changes people’s demand

Normal goods – goods you buy more of when your income increases

Inferior goods – goods you buy less of when your income increases

Income Effect – changes to a person’s income changes their demand

Why is this important for firms?

What sorts of goods are these?

Others?Compliments?Normal/Inferior?

Cultural?

Preferences changeSouth Korea >>>>>

At your tables6. When would be a good time to sell normal goods? (when the economy is….?)

7. When would be a good time to sell inferior goods? (when the economy is…..?)

8. List two complements for tomatoes

9. List two substitutes for tomatoes

Determinants of Demand

Causes that will change Demand

Determinants of DemandChanges to tastes and preferences

Determinants of DemandAvailability and price of substitute goods

Determinants of DemandAvailability and price of complements

Determinants of DemandChanges to income

Determinants of DemandChanges to population

Determinants of DemandExpectations of future price

A trick to remember determinants of demand

T R I B ET = tastes of consumers

R = Related goods (P$ change)

I = Income of buyers

B = # of buyers

E = expectations of future price

http://quizlet.com/2043838/individual-markets-flash-cards/

White boardsWhich part of TRIBE will change in the following scenarios to the Tucson movie theater market?

1. Average wage in Tucson increases

2. Price of DVDs & flat screen TVs decrease

3. Population of Tucson doubles

4. New Spiderman movie comes out

5. KOLD reports movie tickets will increase 15% in 2014

6. Xbox1 & PS4 hit the stores

On a separate sheet of paper Identify the changes to the demand for tomatoesIdentify the part of TRIBE and increase or decrease or no change

1. New residents move to Arizona2. Unemployment rises3. The price of spaghetti noodles increase4. Americans try eat healthier and eat more salads5. Americans try eat healthier and eat less pizza6. Price of tomatoes decreases7. Average US income rises8. Explosion at V8 juice facility9. The price of ground beef decreases10. Media reports salmonella outbreak from California tomatoes11. Consumers expect tomato prices to increase next month12. Salsa becomes #1 US condiment

13. Price of tortilla chips triples14. Make up your own example and explain demand change