Warm Up One Direction is coming out with a new perfume and the sales sky rocket, what type of change in demand is that? There has been a recall on all.

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Presentation transcript:

Warm Up One Direction is coming out with a new perfume and the sales sky rocket, what type of change in demand is that? There has been a recall on all Iphones because after the phone has been operating for 1 year it explodes what type of change in demand is that? Opinion: What are three items you cannot live without? Opinion: You will be creating a business this week, come up with three business ideas. Where were you on September 11, 2001? 1.Consumer preference 2.Consumer security

Elasticity of Demand Economics Standard 12.12.2 Learning Goal: I will evaluate the different types of elasticity of demand by analyzing elasticity.

I. Change in Demand The study of how people change their demand for a particular product when the business changes its price Using elasticity of demand helps a business determine what prices it should set on its goods/services (maximize total revenue)

Lemonade Stand

II. Elastic If a change in price results in a large change in the quantity demanded, the demand for the product is said to be “elastic.” Examples = luxury items such as computers, toys, fancy new cars, ect…

Luxury Goods = Elastic

III. Inelastic If a change in price results in little change to the quantity demanded, the demand for the product is said to be, “inelastic” Examples = necessities such as milk for a baby, gas for your car so you can get to work, a postage stamp…

Necessities = inelastic

IV. Unit Elastic A given price change in price causes a proportional change in quantity demanded Ex: a 5% drop in price would cause a 5% increase in quantity demanded

POST IT (WRITE YOUR NAME ON THE STICKY SIDE DO NOT WRITE THE QUESTION 1. Indoor ice-skating has become very popular and the price to skate has increased. The price increase is a result of an increase in ________ 2. What will happen to the price of Nike basketball shoes if Nike becomes the official shoe provider of the NBA? 3. The demand of necessities are considered ______ 4. The demand for luxuries are considered _______

Answer the following questions under your warm up, don’t write the questions just your answers Pick a business that you shop/use a lot in Visalia. Write the name and location of the business. Why do you purchase from this business? What is the competition for the business that you selected? How does the selected business compete? If your income were to increase what would happen to the demand in that stores products/services?