ࡱ> ikfgh 7bjbj "jj3l.......B*F*F*F*FFF|B'vIIIIIKKKʆ̆̆̆̆̆̆ z̆.KIK@KKK̆M..II{MMMK".I.IʆMKʆMM)R _H..6wII ŖBC*FKg6w0'h7iL$76wMBB....Unit 2: Supply & Demand Goals 8.01-8.06, 9.03 Unit Essential Questions How does the consumer drive the economy? How do the forces of supply and demand lead to efficient use of resources? BLOCK PACING Day 1: (8.04) Law of Demand Law of Supply Day 2: (8.05,8.06,9.03) Market Price Changes in Supply & Demand Day 3: Review Supply & Demand Test US Economic System + Supply & Demand Unit II How Markets Work: Supply, Demand, Prices and Markets NCSCOS 8.01, 8.04, 8.05, 9.03 PART 1 SUPPLY AND DEMAND Chapter 21, Section 1 (pgs. 569-572) What is demand? ___________________________________________________ __________________________________________________________________ What is necessary for an individual to have affective demand? ___________________________________________________ ___________________________________________________ ___________________________________________________ What is market demand? __________________________________________________________________ What does a demand schedule show? __________________________________________________________________ Complete the following demand schedule for video games: Price Per Video GameQuantity Demanded$50$40$30$20$10$ 5 What is a demand curve? ____________________________________________ Plot the demand curve for the schedule above: Demand curve for video game           What direction does the demand curve slope from left to right? _______________ What does the law of demand state? __________________________________________________________________ What does utility refer to? __________________________________________________________________ What does the law of diminishing marginal utility state? ___________________ __________________________________________________________________ Chapter 21, Section 2 (pgs. 574-578) What factors affect demand in the market? (What are the determinants of demand?) changes in: ___________________________________________________________ ___________________________________________________________ ___________________________________________________________ ___________________________________________________________ ___________________________________________________________ ___________________________________________________________ Suppose the price of video game players suddenly increase dramatically, what would happen to the demand for video games? ____________________________ Plot the new demand schedule showing a decrease of 100 at every price: Price Per Video GameOriginal Quantity Demand New Quantity Demand$50$40$30$20$10$ 5Graph the original curve and label it D1 then plot the change and label it D2:        With a decrease in demand at every price we will see a _____________ shift in the demand curve. Now suppose that a new report comes out that states playing video games improve students grades in school. What will happen to demand at every price? _________________________________________________________ On the graph above plot the new change in demand showing an increase of 100 in market demand at every price. Label the new curve D3. What direction did the curve shift with an increase in demand at every price? _________________________________________________________ What does demand elasticity refer to? ___________________________________ __________________________________________________________________ If a product has rather elastic demand it means the demand will change _______________ with a change in price. If a product has rather inelastic demand it means that demand will change _______________ with a change in price. Label the graph that illustrates a product with more elastic demand and the one with more inelastic demand:           What factors affect the elasticity of a good or service? _________________________________________________ _________________________________________________ _________________________________________________ _________________________________________________ Chapter 21, Section 3 (pgs. 581-586) What is supply? __________________________________________________________________ What does the law of supply state? _____________________________________ __________________________________________________________________ What does a supply schedule illustrate? _________________________________ __________________________________________________________________ Complete the following supply schedule: Price Per Video GameQuantity Supplied$50$40$30$20$10$ 5What does a supply curve illustrate? ____________________________________ __________________________________________________________________ Graph the supply curve above on the graph below: In what direction does the supply curve slope reading from left to right? _____________________________ What can cause a shift in market supply at every price? ___________________________________________________ ___________________________________________________ ___________________________________________________ ___________________________________________________ ___________________________________________________ Subsidies ___________________________________________ ____________________________________________________ ____________________________________________________ Suppose a new retail store opens in the community so that 100 more video games will be supplied at every price. Complete the supply schedule showing the change. Price of Video GamesOriginal Quantity Supplied Change in Quantity Supplied$50$40$30$20$10$ 5 Now graph the original and the change below. Label the original S1 and the change S2:        When market supply increases at every price the supply curve shifts to the __________________________. Now suppose that the government increases taxes on the video game industry to help pay for the medical costs incurred by individuals who have hand problems from playing too many video games. What will happen to supply? ________________________________________________________________ On the graph above plot the change assuming that 100 less video games will be supplied at every price and label it S3. What does supply elasticity mean? __________________________________________________________________ Elastic Supply _______________________________________________ Inelastic Supply ______________________________________________ What affects the elasticity of supply? __________________________________________________________________ PART 2 - SUPPLY AND DEMAND, MARKETS AND PRICES Chapter 21, Section 4 (pgs. 588-592) Graph the following supply and demand curves from the schedule below on the graph that follows. Price of Video GamesQuantity Supplied S1Quantity Demanded D1$5050050$40400100$30300200$20200300$10100400$ 550500        Equilibrium Price ____________________________________________ ____________________________________________________________ What is the equilibrium price of video games in our market above? _____ What is a surplus?__________________________________________________ __________________________________________________________________ What is a shortage? _________________________________________________ __________________________________________________________________ If price was set at $40 in the market graphed above what would exist? Shortage b. Surplus If price was set at $10 in the market graphed above what would exist? Shortage b. Surplus What impact will a shortage have on price? ______________________________ A surplus? ________________________________________________________ What are price controls? _____________________________________________ __________________________________________________________________ Price Ceiling ________________________________________________ Example ______________________________________________ Price Floor __________________________________________________ Example ______________________________________________ Prices are signals, what do they tell us? ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ What are the advantages of using price as the decision maker in a market economy? Prices are neutral ____________________________________________ ____________________________________________________________ Prices are Flexible ___________________________________________ ____________________________________________________________ Price provides freedom of choice _______________________________ ____________________________________________________________ Prices are familiar ___________________________________________ ____________________________________________________________ Supply & Demand Unit Lesson 1: The Law of Demand - Class Questions How many of you would be willing to buy a doughnut at the following prices? (.30, .40, .50, .60, .70, .80) How many doughnuts would be bought at the following prices? (.55, .75) What does the demand curve tell us about the relationship between price and demand? What would you do if you thought the price of doughnuts was too high? Based on your observations, what is the law of demand? Lesson 2: The Law of Supply - Class Questions What people are involved in supplying doughnuts? What would you do if you thought people would pay a high price for doughnuts? What would you do if you thought people would only pay a small price for doughnuts? How many would you produce at the following prices? (.30, .40, .50, .60, .70, .80) About how many would be sold at the following prices? (.55, .75) What does the supply curve tell us about the relationship between price and supply? Based on your observations, what is the law of supply? HW: Create another graph combining the supply & demand curve. Lesson 3: Market Price, Changes in Supply & Demand What does the point where the supply curve and the demand curve intersect represent? If another class began selling doughnuts in school, what effect would this have on supply? Graph Change, Label S1 Suppose Krispy Kreme had a shortage of dough, thus our class could only get a limited number of boxes. What effect would this have on supply? Graph Change, Label S2 Suppose it is late May, and our class is selling doughnuts. Another class began selling ice cream. What effect would this have on demand, and why? Graph Change, Label D1 Suppose we were the only class at school selling snack items. What effect would this have on demand? Graph Change, Label D2 What effect would each of these have on price? Supply & Demand Test Review Test Format 10 Matching 30 Multiple Choice Demand Law of Demand Demand Schedule Demand Determinants Supply Law of Supply Supply Schedule Supply Determinants Elastic/Inelastic Demand Elastic/Inelastic Supply Substitutes Complements Surplus Shortage Diminishing Marginal Utility Subsidy Price Controls Graphing Supply & Demand (Practice) Label the schedules below either Supply or Demand. 1) __________________ 2) ___________________ Price Quantity Price Quantity $20 140 $20 20 $30 125 $30 35 $40 105 $40 60 $50 80 $50 85 $65 70 $65 110 $70 40 $70 140 On a sheet of graph paper, set up the graph above. Label the following. Demand Curve (D). Supply Curve (S). Market Price Give the price and the quantity. Answer the following questions. If demand increases, price will ______________. Graph change: Label D1. If demand decreases, price will _____________. Graph change: Label D2. If supply increases, price will _______________. Graph change: Label S1. If supply decreases, price will ______________. Graph change: Label S2. Supply & Demand Test Graph Part 1: Label the schedules below either Supply or Demand. 1) __________________ 2) ___________________ Price Quantity Price Quantity $40 150 $40 20 $50 135 $50 35 $60 115 $60 55 $70 95 $70 80 $75 70 $75 110 $80 40 $80 150 Part 2: On the back of this sheet of paper, set up the graph above. Label the following. Demand Curve (D). Supply Curve (S). Market Price Give the price and the quantity. Part 3: Answer the following questions. Graph & Label Changes. If demand increases, price will _______________________. Graph change: Label D1. If demand decreases, price will ______________________. Graph change: Label D2. If supply increases, price will ______________________. Graph change: Label S1. If supply decreases, price will _____________________. 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