Transcript Supply and Demand Together

 For classwork credit:
Create shifts
 There are ten total shifts (5 supply and 5 demand). Come up with a
scenario for each.
 Bellringer
 Review Questions
 Check in: Supply and Demand together graph
Agenda
 Notes: Supply and Demand together
 Midterm Thursday and Friday
 Identify the determinants of demand
 BITER
Review
Questions
 Identify the determinants of supply
 RENTS
 When more is produced than is demanded, what is the result?
 Surplus
 When less is produced than is demanded, what is the result?
 Shortage
Supply and
Demand
Together
Graphs
 How did it go?
 Are we finished?
 Need more time?
Supply and Demand
Together
Objective
Students will draw supply and demand
curves and be able to identify
equilibrium, surplus, shortage, and
illustrate appropriate determinant shifts
In market and mixed economies, supply
and demand work together to help the
economy self-regulate
Supply and
Demand
Adam Smith called this phenomenon the
“Invisible Hand”
Supply and demand work together to
determine prices and prices are the basis
of most economic decisions
Supply and
Demand
Schedule
Graphing
Supply and
Demand
 Same rules apply for when you graphed them
separately. They make an “X”
Graphing
Supply and
Demand
 “Mind your P’s and Q’s” (P(rice) on vertical axis,
Q(uantity) on horizontal)
 Demand is always downward sloping, Supply is
always upward sloping
 Always label supply curve (s) and demand curve
(d). Search and destroy!
Graphing
Supply and
Demand
Surplus: when there is more of an item
supplied than is demanded. You have
“extra”
Working
Together
 Signal that price is too high – people don’t
want to buy it
How do you alleviate a surplus?
 Drop the price!
Surplus
Surplus
Shortage: quantity demanded is
more than what is supplied. There is
not enough to go around
Shortage
Signals that prices are too low!
Everyone is buying!
Solution: Raise the price
Surplus
Shortage
 When operating without any restrictions
(Laissez-Faire) our market economy will self
regulate
Add it all up…
 This means shortages and surpluses are
automatically sorted out by price restructuring
– the result is a perfectly balanced
market/mixed economy
 When an economy reaches equilibrium – it will
stay there until either supply or demand shifts
Equilibrium
 Equilibrium: The price at which supply and
demand meet
Equilibrium
Equilibrium
 Draw a standard supply and demand curve (be
sure to label)
Check for
Understanding
 Label surplus
 Label shortage
 Label equilibrium
 When given a scenario ask yourself “Does this
affect supply or demand?”
 Remember all of your determinants
Shifting
Together…
 Example: if a scenario is about technology, obvi
it is a supply shift
 Trickiest shifts: expectations! Must think of it
from either a consumer or producer
standpoint.
 After you have determined which line will shift
(supply or demand), using labels to identify
which direction it will go
Shifting
Together…
 Write the determinant that is at work
 If applicable – identify the new equilibrium
price
Visual
Price
1. The income of the Chapel Hill townies declines
after an early loss during March Madness.
S
P1
P2
D
D1
Q2
Q1
Quantity
Price
2. Chapel Hill is named one of the most
beautiful towns in North Carolina and tourism
doubles
S
P2
P1
D1
D
Q1
Q2
Quantity
Price
3. The price of
blue ties
decreases. How
does this affect
demand for
purple ties? (Blue
P1
ties are a
substitute good P
2
for purple ties)
S
D1
Q2
Q1
D
Quantity
Price
4. The Federal government has been warning the public
about the possibility of a recession and job loss in the
RDU area.
S
P1
P2
D1
Q2
Q1
D
Quantity
The price of silk
increases (ties
are made with
silk).
Price
S1
S
P2
P1
D
Q2 Q1
Quantity
Price
S
The government
adds a subsidy to
tie production.
S1
P1
P2
D
Q1
Q2
Quantity
Price
Purple ties are named by GQ magazine as a “must have” for
all young professionals. At the same time, a new textile
machine decreases the cost of producing purple ties.
S
S1
P1
D1
D
Q1
Q2
Quantity
Practice
 Complete the worksheet