Transcript DEFINITIONS Terms you Must Know!

DEFINITIONS
TERMS YOU MUST KNOW!
"The study of the production, distribution and
consumption of wealth in human society."
ECONOMICS
The Economist's Dictionary of Economics
"Most simply put, economics is the
study of making choices."
RESOURCES
SCARCITY
GOODS
SERVICES
Work donestocks
Available
Shortage;
Commodities
inforeconomics,
orother
products
or supplies
people;
something
such
on
foras
which
example,
lumber,
is we
SCARCE
can
barbers,
sugar,
draw
or
to satisfy
when
computer
musicians
someone
our
chips;
andneeds
architects
will
in economics,
buy
anditwants
provide
for a price
a good
services
is any
for item
other
scarce enough
people.
In economics,
to command
a service
a price
is any service
scarce enough to demand a price.
Resources
Scarcity
Goods
Services
DEFINITIONS
TERMS YOU MUST KNOW!
IMPULSE
OPPORTUNITY
BUYING
COST
Making
Something
a purchase
given upwithout
to obtain
weighing
something
the else
opportunity cost
Opportunity cost
Impulse buying
DEFINITIONS
TERMS YOU MUST KNOW!
SPENDING TRENDS
For this assignment you are going to focus on spending trends for your age group.
• 1.) First you are going to identify between needs and wants for your
age group. Minimum of 5 for each need and want.
• 2.) Next you are going to identify the needs and wants for the opposite
sex; if you are unsure, ask a peer in your class. Identify trends that
you see.
• 3.) Once you have gathered this information you are going to identify a
factor that creates purchasing trends for each of the wants for both
sexes. (10 factors in total, factors must be different)
• 4.) For each of the wants for both sexes you are going to explain how
advertising affects those particular purchases in 1-2 complete
sentences.
THE LAWS OF SUPPLY AND DEMAND
SUPPLY
• The consumer’s side of the
market
as the price of a good rises, its
quantity supplied will rise;
DEMAND
• The producer’s side of the
market
as the price of a good or
service rises, its quantity
demanded falls;
as the price of a good or
service falls, its quantity
demanded increases
CATHERINE’S DEMAND SCHEDULE
AND DEMAND CURVE
Price of
Ice-Cream Cone
$3.00
2.50
1. A decrease
in price ...
2.00
1.50
1.00
0.50
6 7 8 9 10 11 12 Quantity of
Ice-Cream Cones
2. ... increases quantity
of cones demanded.
0 1 2 3 4 5
SUPPLY AND DEMAND
Copyright © 2004 South-Western
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MARKET DEMAND IS THE SUM OF
INDIVIDUAL DEMANDS
The
lawSUPPLY
of supply
summarizes
the effect
BEN’S
SCHEDULE
AND SUPPLY
CURVE
Price
of producer behavior.
price changes have
on
Ice-Cream
Supply curve
Cones
For example, a business
will
make
more
$3.00
-When consumers
start paying
Price of game
Quantity
of
video
systems
2.50if the price of those
your
employer pays
more
for cupcakes
thantime
for and a
Ice-cream cone -When
Cones supplied
2.00
systems
increases.
The
opposite
is
true
if
$0.00
0for
cones
half
overtime,
the
number
of
hours
donuts,
bakeries
will increase
0.50
0
1.50
you
are
to
supply
for
work
1 willing
the1.00
price
of
video
game
systems
decreases.
their
output
of
cupcakes
and
1.00
1.50
2
increases.
2.00
3 might supply 1,000,000
The
company
reduce
their0.50
output of donuts in
2.50
4
3.00
increase
theireach,
profits.
systems
iforder
the5 to
price
is 0$200
but if the
1 2 3 4 5 6 7 8 9 10 11 12
Quantity of Ice-Cream Cones
price increases to $300, they
might supply
1,500,000 systems.
1. An increase
in price . . .
2. . . . increases quantity
of cones supplied.
SUPPLY AND DEMAND TOGETHER
Demand Schedule
Supply Schedule
At $2.00, the quantity demanded is
equal to the quantity supplied!
EQUILIBRIUM OF SUPPLY AND
DEMAND
Price of
Ice-Cream
Cones
$3.00
2.50
2.00
Supply
Equilibrium
price
Equilibrium
1.50
1.00
0.50
0
Equilibrium
quantity
1 2 3 4 5 6 7 8 9 10 11 12
Quantity of Ice-Cream Cones
Demand
THE HIDDEN MARKET
• The SUBSTITUTION effect:
If you are selling a slice of pizza for $3, there
For many
every good
or service,
there who
is a substitute
are
consumers
out there
may only
available:
have $1, or $2 in their pocket. These
• A hot dogare,
for $1
of a slice MARKET.
of pizza for $3
consumers
forinstead
you, a HIDDEN
How
do youpieces
reachofthem?
• Smaller
pizza for less money
• Cheaper pizza with fewer toppings
SUPPLY AND DEMAND ASSIGNMENT
QUESTION 1
Create a supply and demand chart for a product of your choice.
Use what you are familiar with and know to be REASONABLE
prices!! Identify the following:
a)
b)
c)
d)
e)
f)
supply line
demand line
market equilibrium
excess goods
scarcity
the target market for your good
SUPPLY AND DEMAND ASSIGNMENT
QUESTION 2
What would happen to the supply and demand for
your good under the following situations?
a. an increase in price of $2-$5
b. a decrease of $2-$5
c. the price doubles
EQUILIBRIUM OF SUPPLY AND
DEMAND
Price of
Ice-Cream
Cones
$3.00
2.50
2.00
Supply
Equilibrium
price
Equilibrium
1.50
1.00
0.50
0
Equilibrium
quantity
1 2 3 4 5 6 7 8 9 10 11 12
Quantity of Ice-Cream Cones
Demand
SUPPLY AND DEMAND ASSIGNMENT
QUESTION 3 - 5
3. Define hidden market. Identify 3 separate items that are
designed to reach the hidden market for the product you
chose in #1.
4. What is the difference between your target market and your
hidden market?
5. What is the difference between a need and a want? Give
examples, using product or service examples from your own
life experience.