Transcript Supply & Demand

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Supply- How much of a good will be supplied at a
particular price.
Demand- How much of a good will be demanded at a
particular price.
Equilibrium price- The price at which the producer is
willing to sell their product and the price at which
consumers will buy them.
Substitute goods- Goods that can be used in place of
one another. Ex: McDonald’s & Burger King,
Margarine & Butter
Complimentary goods- Goods that work together. Ex:
DVD & DVD Player, Computer & Software, Baseball
glove & Ball
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Personal income- All of the money received by a household.
Disposable income- Income that is left after paying taxes.
This is spent on out needs. Ex: Mortgage
Discretionary income- Income that is leftover after meeting
our needs. This may be spent on our wants. Ex: ipods
Shortage- When demand for a good exceeds supply.
Surplus- When the supply of a good exceeds demand.
Inflation- A general rise in prices.
Interest rate- The amount of money paid to a lender in
exchange for the use of the lenders money. Ex: Mortgage,
credit cards
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What three elements depend on one another
for economic interdependance?
What role do households play in the economy?
What role do firms play in the economy?
What role does the government play in the
economy?
What type of economic system does the Island
of Mocha have?
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EQ: HOW DO CONSUMERS AND MARKETS
REACT TO SHORTAGES AND SURPLUSES?
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In the circular flow of the economy in which
market do people sell their labor?
1.
What are the 3 major economic actors in the U.S.
economy?
Gov’t, market, entrepreneurs
B. Land, labor, capital
C. Households, businesses, gov’t
D. Consumers, producers, businesses
A.
2.
The fact that these 3 actors need each other in order
for the economy to function smoothly is referred to as
what?
A.
B.
C.
D.
Circular reliance
Economic need
Economic interdependence
Product and factor markets
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Supply
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How much a certain good
is available to consumers.
As price increases…supply
is increased
Demand
How much consumers
want the particular good.
 As price
decreases…demand
increases
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Law of Supply and Demand
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Producers will only supply a product that will…
 Make a profit
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Consumers will only demand a product for which
they need or want at a price they can afford.
Supply will be determined by what is demanded.
 Producers will supply goods as long as they can make a
profit.
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Supply curve (supply schedule)
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Shows how much of the
product that sellers are willing
to sell at various price levels.
Demand
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Demand curve (demand
schedule)
–
Shows how much of the
product buyers are willing to
purchase at various price levels.
Price
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Equilibrium (market) price
The point at which the supply
and demand curves meet.
– The price at which producers
are willing to sell their products
and the price at which
consumers will buy those
products.
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Supply
Quantity
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Personal income
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Disposable income
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All of the money received by a
household
All of the income a household has
after paying taxes.
Spent on needs (mortgage,
electrical bills)
Discretionary income
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The income left after paying for
“necessities” .
Spent on our wants
Impacts supply and demand
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The more suppliers there are,
the more options for
consumers.
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The more options for
consumers, the more producers
must compete for business.
In order to compete, producers
must either lower prices while
still making a profit, or quit
producing the good.
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Substitute goods
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Goods that can be used in
place of other goods.
 Ex: McDonald’s, Burger King,
& Wendy’s
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Increases competition
Complimentary goods
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Goods that work together to
fulfill a certain need.
 Ex: DVDs and DVD players are
both useless unless used
together.
1.
When what is produced will be determined by what
consumers want, provided they are willing to pay
enough is called what?
A.
B.
C.
D.
2.
The market
The law of demand
The law of supply and demand
The influence of disposable income
The price at which total supply equals total demand
it known as what?
A.
B.
C.
D.
The middle price
The consumer price
Consumer demand
Equilibrium price
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On the island of Mocha, what was caused by
the storm and the war?
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What is a shortage?
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Shortage of wood
When there is not enough of a product
What is a surplus?
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When there is too much of a product
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Shortage
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When supply of a good
falls short of the demand.
 A price below equilibrium
Price
Demand
Surplus
results in a shortage
 Prices increase
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Surplus
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When supply of a good
exceeds the demand.
Shortage
 A price above equilibrium
results in a surplus.
 Prices decrease
Supply
Quantity
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Consumer tastes refers to
individual consumers’
preferences.
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What is desirable to one
consumer may not be
desirable to another.
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Inflation
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A general rise in prices for products.
Deflation
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A general fall in prices for products.
 Gasoline
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Stagflation
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When prices rise and
employment/wages fall at the same
time.
Interest rates
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The amount paid to a lender in
exchange for the use of that lender’s
money.
Higher interest rates = save
Low interest rates = spend
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Minimum wage
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Price floors
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Minimum price below which the price of
a good is not permitted to drop.
Price ceilings
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Supporters argue that anything less
would not provide an adequate standard
of living.
Opponents argue that it creates a surplus
of labor that leaves many unemployed.
Maximum price above which the price of
a good is not permitted to rise.
Fiscal policy
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Deficit spending (FDR)
Supply-side economics (Reagan)
 Cut corporate taxes so that businesses can have
more money to spend on production and labor.
 “Trickle down effect”
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EQ: HOW DO CONSUMERS AND MARKETS
REACT TO SHORTAGES AND SURPLUSES?
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SUMMARIZE THE LAW OF SUPPLY AND DEMAND AND
CREATE A DEMAND AND SUPPLY SCHEDULE
EXPLAIN WHAT IS THE EQUILIBRIUM PRICE?
IDENTIFY SOME OF THE INFLUENCES ON SUPPLY AND
DEMAND?
INTERPRET THE IMPACT OF COMPETITION ON SUPPLY
AND DEMAND?
COMPARE AND CONTRAST SUBSTITUTE GOODS AND
COMPLIMENTARY GOODS
IDENTIFY FACTORS THAT AFFECT PRICES?
EXPLAIN THE DIFFERENCE BETWEEN INFLATION AND
DEFLATION?
EVALUATE HOW INTEREST RATES CAN IMPACT PRICES
AND AFFECT SPENDING?
IDENTIFY WAYS THE GOVERNMENT IMPACT PRICES?
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What is the Equilibrium Price?
The Equilibrium Price is the price producers
sell their product and the price consumers pay
for the product.
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Using pictures from the magazines and what you just
learned create a collage of complimentary and
substitute goods.
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Divide your poster board in half to separate each type of good.
Answer the following question on your collage:
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What will happen to demand if the price rises for a
substitute/complimentary good?
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OR
Complete the Supply/Demand donut fundraiser
packet