Transcript Unit 5 Price System - STEM Middle School

Do Now
Explain
what the 4
determinants of
demand are…
What is the law of
supply as prices go up
supply…
Do Now
 Which
determinant of
supply deals with the
profits/expenditures
businesses incur?
 The market-clearing price
is where what two curves
intersect?
The Price
System
STANDARD 1.3.3
The Price System

Price is the language of economics

*The interaction of supply and demand
determines the equilibrium price*
 This
equilibrium price is the compromise
we live by everyday

http://www.criticalcommons.org/Members/fsustavros/clips/cs
e-1-4-stossel-2011-economics-of-voluntary-1/view
Market Equilibrium
Market Equilibrium
is when quantity
supplied and quantity
demanded are equal
– Perfection!!!!
• Supply curve and
demand curve
intersect
Where does Equilibrium
Occur on this chart?

At what price does equilibrium occur? How do we
know again?
Supply-Demand Market Equilibrium
D
a
A
$500
Price per Xbox
360
450
400
E
350
300
g
250
200
0
D
S
30
40
50
60
70
80
Quantity
in Billions of Xbox 360
per Year
90
S
Shortage: “Not Enough!!”
With shortages, price
tends to rise until
equilibrium is restored
Things that might
happen…
– - Black markets
– - Rationing
– - Violence
Surplus: “Having too much”
• With surpluses, prices
tend to fall until
equilibrium is restored
• Things that might
happen…
– - Little re-sale value
– - Lack of consumer
interest
– - Worthlessness
Managing Prices

Sometimes Governments set prices to
protect producers and consumers
 Price
Ceiling: Government action
that establishes a maximum price
for a certain good
 Price
Floor: Government action that
establishes a minimum level of
prices.
Anything
below it illegal
Please Sketch
Chapters 5 Part III Managing
Prices

Explain why governments sometimes set prices.

Explain what governments try to accomplish
through price floors and price ceilings, and
rationing

Explain what happens when governments
manage prices
Do Now

Define Equilibrium

Under what conditions does this event exist?
What’s a price ceiling?
CONTINUE
Price Floor Example

An important example of a price floor is the
**minimum wage**

Minimum Wage: the lowest allowed by the law in
a state or country

A business cannot pay an employee lower than
what the federal gov’t says (illegal)

Do Now: In your opinion what is the “language”
of economics?

What are some benefits of raising the minimum
wage?

What are some negatives of raising it?
http://www.whitehouse.gov/raise-thewage?utm_expid=24505866-22.orh-8EtwQudGtoBaX9aiA.0
 http://www.myfoxdetroit.com/story/26445639/arrests
-after-fast-food-wage-protesters-block-mackavenue
 http://www.nytimes.com/video/us/politics/10000000
2676720/obama-on-raising-the-minimum-wage.html
 https://www.youtube.com/watch?v=Z0xVojIYA-o


Michigan's minimum wage increased from
$7.40 per hour to $8.15 per hour on Sept. 1.,
the equivalent of $16,952 per year for a 40hour work week. An increase to $15 per hour
would equal $31,200 per year for a 40-hour
work week.
Anti-Minimum Wage

Businesses tend to fight against a higher minimum
wage because their total costs will increase if they
have to pay their employees more wages
Writing Tracker

Should we raise the minimum wage? Explain using
examples and following the new structure
DO NOT WRITE
Prisoner B
stays silent
Prisoner A
Stays Silent
Each serves
1 year
Prisoner A
Prisoner A
Betrays/Testifie goes free
s
Prisoner B 20
years
Prisoner B
Betrays/Testifie
s
Prisoner A 20
years
Prisoner B
goes free
Each serves 10
years
Writing Tracker Help:

Thesis: Statement of Purpose

Body Paragraph with intro Topic Sentence
Reiterating your main idea

Evidence: Back up your argument with facts and
“DATA”

Counter Argument: What the other side might say
and why they are wrong

Conclusion: Restate Thesis
DO NOT WRITE
Because betraying a partner offers
a greater reward than cooperating
with them, all purely rational selfinterested prisoners would betray
the other, and so the only possible
outcome for two purely rational
prisoners is for them to betray each
other
 http://www.investopedia.com/vide
o/play/prisoners-dilemma/

Problems with Price
System

Public Goods: any good or service that is
consumed by ALL members of a society

Police Protection, Fire protection, Schools

https://www.youtube.com/watch?v=p3Uos2fzIJ0

Prisoners Dilemma Game Show!