Transcript Unit 5. Equilibrium Prices

Unit 5. Equilibrium Price,
Grade 10, Economics
Grade 10, Economics, Unit 5 Equilibrium.
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Demand:
 Effective demand,
The willingness and ability to buy a product.
 Demand and price are inversely related.
- Demand will rise as price falls.
- Demand will fall as price increases.
Grade 10, Economics, Unit 5 Equilibrium.
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Individual and Market Demand:
 Study individual.
 Study market.
 Individual demand:
The amount of product an individual would be willing
and able to buy, at different prices.
 Market demand:
The total demand for a product at different prices. It is
found by adding up each individual’s demand at
different prices.
Grade 10, Economics, Unit 5 Equilibrium.
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A Demand Schedule:
 Lists the different quantities demanded of a
product, at different prices over a particular
time period.
Grade 10, Economics, Unit 5 Equilibrium.
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A Demand Schedule: Daily Demand for Train
Tickets from Oxford to London in The Winter
Months. (Fig 1.)
Price (Pound sterling)
Quantity demanded
50
2200
45
2500
40
3000
35
3800
30
5000
25
7000
Grade 10, Economics, Unit 5 Equilibrium.
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Activity 1.
 Using the following demand schedule, plot the
demand curve for rooms in a hotel in Delhi.
Price (Rupees)
800
700
600
500
400
300
Number of rooms
10
20
35
55
80
110
Grade 10, Economics, Unit 5 Equilibrium.
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The Effect of a Change in Price on
Demand.
 Fig 4.
 Fig 5.
 An extension in demand:
A rise in the quantity demanded caused by a
fall in the price of the product itself.
 A contraction in demand:
A fall in the quantity demanded caused by a rise in the
price of the product itself.
Grade 10, Economics, Unit 5 Equilibrium.
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Supply:
 The willingness and ability to sell a product.
 A rise in price will lead to a rise in supply.
 A decrease in price will lead to a decrease in
supply.
Grade 10, Economics, Unit 5 Equilibrium.
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Individual and Market Supply
 Individual supply:
The supply of one plant/firm.
 Market supply:
The total supply of a product produced by all
the firms in the industry.
Grade 10, Economics, Unit 5 Equilibrium.
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A Supply Schedule: Daily Supply of Train Tickets
from Oxford to London in Winter Months
Price (Pound sterling)
Quantity supplied
50
6000
45
5000
40
4300
35
3800
30
3600
25
3500
Grade 10, Economics, Unit 5 Equilibrium.
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Supply
 Fig 6.
 Fig 7.
Grade 10, Economics, Unit 5 Equilibrium.
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Price Determination:
 Equilibrium price:
- The price where demand and supply are
equal.
- Market clearing price.
Grade 10, Economics, Unit 5 Equilibrium.
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The Daily Demand for and Supply of Train Tickets
from Oxford to London in Winter Months.
Price
Quantity supplied
50
Quantity
demanded
2200
45
2500
5000
40
3000
4300
35
3800
3800
30
5000
3600
25
7000
3500
Grade 10, Economics, Unit 5 Equilibrium.
6000
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Equilibrium:
 Fig 8.
 Fig 9.
 Fig 10.
 Fig 11.
Grade 10, Economics, Unit 5 Equilibrium.
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Activity:
As the 2006 World Cup approached, sales of Brazilian
football shirts increased not only in Brazil but also in a
number of other countries. Two weeks before the
compensation started, shops in London and Sao Paulo
reported that demand for shirts was outstripping supply.
a. On a demand and supply diagram, illustrate the
market for Brazilian football shirts in Sao Paulo two
weeks before the 2006 World Cup.
b. What would you have expected to happen to the
price of Brazilian football shirts in Sao Paulo in this
situation? Explain your answer.
Grade 10, Economics, Unit 5 Equilibrium.
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