Transcript The Market SD

The Market
Supply and Demand Together
Reference 5.1
Write a paragraph in your spiral to
answer the following:
• Suppose the price of bread at the grocery
store is $2.00. Explain why it’s $2.00.
Why isn’t it $1.25 or $3.00?
Use supply and demand curves to
understand how price is set.
• Consider a supply and demand curve on
one graph.
• Consider e-bay and how price is set by
bidders
• Consider an imaginary commodities
market.
– In the text, read 5.1, pages 110-112.
• Copy the graph in exhibit 5-1 in your spiral.
– Plot each of the bullet points using a-e.
• Write a definition for each key term in the reading
Review:
• On a graph, the point where supply and
demand intersect is called equilibrium
• Equilibrium in a market exists when the
quantity of a good demanded is equal to
the quantity of a good supplied.
• That point is the equilibrium price
• A change in equilibrium price can be
brought about by changes in supply and/or
demand.
Review
• When there is a greater quantity demanded than
quantity supplied = shortage
• When there is a greater quantity supplied than
quantity demanded = surplus
• MARKETS MOVE TO EQUILIBRIUM
• A change in equilibrium price can be brought
about by changes in supply and/or demand.
What could cause an increase in demand?
What happened to price?
Preferences
Number of buyers
Price of related goods
Income
What could cause an increase in supply?
What happened to price?
Technology
Resource prices
Gov. actions
Number of Sellers
What could cause a decrease in demand?
What happened to price?
Price of related goods
Preferences
Income
What could cause a decrease in supply?
What happened to price?
resource prices
Weather
Gov. action
Practice Time
• For each of the following scenarios, draw and write what
would happen to supply, demand, equilibrium price and
equilibrium quantity. Explain the reason.
– A company that makes cables for computer networks
invents a way to lower the cost of making their cables.
– With significantly cheaper prices for computers, more
people can buy computers. What might happen to the
market for Internet service?
– Gas prices start to increase dramatically. What happens
to the market for SUVs that get bad gas mileage?
– A very flashy ad campaign for little-known brand of ice
tea increases its popularity among consumers. The
company is ready to make any amount of iced tea
necessary to satisfy changes in demand.
Draw and write what would happen to supply, demand, equilibrium
price and equilibrium quantity. Explain the reason.
1.
2.
3.
4.
5.
6.
7.
8.
Label the graph with the
good.
Draw graph w/ D1 and S1
Demand or Supply shift?
Factor?
Direction of Shift?
Original Equilibrium price?
New Equilibrium price?
What happened to price?
Sentence to explain reason
for price change.
•
A company that makes cables for
computer networks invents a way
to lower the cost of making their
cables
Cables
S1
S2
D1
Practice Time
• For each of the following scenarios, draw and write what
would happen to supply, demand, equilibrium price and
equilibrium quantity. Explain the reason.
– A company that makes cables for computer networks
invents a way to lower the cost of making their cables.
– With significantly cheaper prices for computers, more
people can buy computers. What might happen to the
market for Internet service?
– Gas prices start to increase dramatically. What happens
to the market for SUVs that get bad gas mileage?
– A very flashy ad campaign for little-known brand of ice
tea increases its popularity among consumers. The
company is ready to make any amount of iced tea
necessary to satisfy changes in demand.
More Practice
– A new method to supply better memory chips for
cell phones
– Several new brands of cell phones are introduced,
competing with Motorola
– iPhones shown to cause cancer due to inflated
amount of transmitting sound waves
– Government raises tax on oil imports, gasoline
– Great advertising campaign for Chipotle burritos
– Hepatitis outbreak @ Chipotle, Panda Express
– Chargers are 4-0 now, season tickets
– Great ad campaign for Doritos, horrible droughts in
Iowa. Corn
What happens when both Supply
and Demand Shift?
Double Shifts
• S > D = P
• D > S = P
• D > S = P
• S > D = P
• D  = S  = P constant
• D  = S  = P constant
Homework
• Read pages 113-119.
• Complete #2-8 on page 119.
True or False?
• When quantity supplied is greater than
T quantity demanded, a surplus exists.
• A shortage occurs when quantity
T demanded is greater than quantity
supplied.
• If price is too high, there is a surplus; if
T price is too low, there is a shortage.
• The supply of goods on hand is inventory.
T
Review
1.
If demand increases and supply is constant what
happens to equilibrium price?
2.
If supply decreases and demand is constant, what
happens to equilibrium price?
3.
If supply increases and demand is constant, what
happens to price?
1.
If the shortage is 40 units and the quantity supplied is
533 units, what is the quantity demanded?
40 + 533 = 573
2.
If supply decreases by more than demand decreases,
what happens to equilibrium price?
Graph the following:
notice what happens to price
A. Demand increases in a market
B. Supply decreases in a market
C. Demand decreases in a market
D. Demand decreases by more than supply
increases in a market
Students and Teachers
A Jigsaw About Supply and
Demand Applied
• Reference Chapter 5.2 p.120-130.
• Each group will be responsible for
teaching their assigned section to the rest
of the class.
Homework:
• Read and note parts of Chapter 5.2:
– P. 129 “Trying Out for a HS Sport”
– P. 130 “GPA, SAT Scores, and College”
– P. 131 “Necessary Conditions…”
• Read and complete Question To Answer
– P. 121 “How a Meeting in Vienna…”
– P. 123 “ The California Gold Rush”
– P. 127 “ How Might Highway Tolls…”
Prepare for Unit 3 Quiz (Ch3-5) Next Class