Table of Contents Access Prior Knowledge New Information Set Goals Activity Conclusion A Fish Market “Equilibrium” Learning Targets Equilibrium Equilibrium In the News “Equilibrium” Learning Targets What If Prices Are Too High? What If Prices Are Too Low? When Demand Changes When Supply Changes When Demand & Supply Change

A Fish Market GAME DESCRIPTION Every day, just before dawn, at fish markets around the world, fishermen haggle over prices with restaurant owners. These are remarkable and chaotic spectacles. The most remarkable thing about it, however, may be that just about every buyer finds a willing seller and vice versa. This is because the price of each type of fish quickly converges to an equilibrium point where quantity supplied equals quantity demanded. In order to see how this happens, the classroom has been turned into a fish market. Part of the class are fishermen (sellers), who want to make money from their morning catch. The other part of the class are restaurant managers (buyers), who seek to provide quality and diversity to their restaurant’s menu for the day. Both buyers and sellers are trying to maximize their profits. Prizes will be given out for achieving each of the following. 1) Buyers with a profit of at least $20. 2) Sellers with a profit of at least $20. 3) Buyer who can achieve the widest variety of seafood (and still have a profit). 4) Seller with the least leftover product (and still have a profit). These are the directions for the Warm Up activity that is included in the download. There are also several accompanying documents for this activity. Read the included Teacher Instructions to understand how to make this activity a success. Tally Sheet And Graph

A Fish Market You will need to get out of “View Slideshow” mode in order to enter data onto this table. Double click the image to open the Microsoft Excel worksheet object. Once open, enter data directly into the blank column. This will cause the final two columns to populate with data. Click on the tab entitled “Graph” to see the data drawn onto a graph. (Sometimes Excel chops off part of the graph for some reason. If this happens, just exit out of the spreadsheet and then double-click the image from PowerPoint again. The graph will be whole again and you will not lose any of the data you entered into the spreadsheet!) If for some reason you cannot get this to work, simply open the full Excel document that was included in the download, entitled “Tally Sheet and Graph.” You can project the image of the actual Excel spreadsheet in this way. To enter data into this spreadsheet, click “End Show” and then double click the image.

“Equilibrium” Learning Targets Reasoning Describe how the market equilibrium price and quantity are determined. Determine the effects on equilibrium price and quantity when demand and/or supply shift. Skill Draw shifts in supply and demand curves.

Equilibrium 1) In competitive markets, equilibrium has been reached when the quantity demanded equals the quantity supplied. Graph It Relate these items back to “A Fish Market.” 1) Where demand and supply intersect on the graph is where equilibrium was for the market.

Equilibrium 1) In competitive markets, equilibrium has been reached when the quantity demanded equals the quantity supplied. Equilibrium Graph It

Equilibrium 1) In competitive markets, equilibrium has been reached when the quantity demanded equals the quantity supplied. Graph It 2) Because all buyers get what they want without any leftover goods, equilibrium is called the “market-clearing price.” Graph It Relate these items back to “A Fish Market.” 2) Although not all products were sold, given enough time all buyers and all sellers would be satisfied.

Equilibrium 1) In competitive markets, equilibrium has been reached when the quantity demanded equals the quantity supplied. Market-Clearing Price ($40) Graph It 2) Because all buyers get what they want without any leftover goods, equilibrium is called the “market-clearing price.” Graph It Exactly 30 crates are supplied and exactly 30 are purchased

Equilibrium 1) In competitive markets, equilibrium has been reached when the quantity demanded equals the quantity supplied. Graph It 2) Because all buyers get what they want without any leftover goods, equilibrium is called the “market-clearing price.” Graph It Relate these items back to “A Fish Market.” 3) Competition was exemplified by the numerous buyers and sellers competing with each other. Information was available in the form of the tally sheet and also from experience after playing the game a few minutes. 3) Markets move toward equilibrium due to competition and availability of information.

What If Prices Are Too High? 1) If prices are above equilibrium, there is more supply than demand. Graph It In the short run prices may be temporarily above equilibrium. Given time, however, prices will drop to equilibrium (in the long run). This happens because sellers must compete with each other to sell their goods. When sellers compete, prices get bid down.

What If Prices Are Too High? 1) If prices are above equilibrium, there is more supply than demand. Supply is 40 Graph It At $44 But demand is only 20 In the short run prices may be temporarily above equilibrium. Given time, however, prices will drop to equilibrium (in the long run). This happens because sellers must compete with each other to sell their goods. When sellers compete, prices get bid down.

What If Prices Are Too High? 1) If prices are above equilibrium, there is more supply than demand. Graph It At $44 2) When supply exceeds demand, there is a surplus. Graph It In the short run prices may be temporarily above equilibrium. Given time, however, prices will drop to equilibrium (in the long run). This happens because sellers must compete with each other to sell their goods. When sellers compete, prices get bid down.

What If Prices Are Too High? 1) If prices are above equilibrium, there is more supply than demand. Surplus of 20 Graph It At $44 2) When supply exceeds demand, there is a surplus. Graph It In the short run prices may be temporarily above equilibrium. Given time, however, prices will drop to equilibrium (in the long run). This happens because sellers must compete with each other to sell their goods. When sellers compete, prices get bid down.

What If Prices Are Too High? 1) If prices are above equilibrium, there is more supply than demand. Surplus of 20 Graph It At $44 2) When supply exceeds demand, there is a surplus. Graph It 3) In order to get rid of surplus quantity, the seller must lower the price. In the short run prices may be temporarily above equilibrium. Given time, however, prices will drop to equilibrium (in the long run). This happens because sellers must compete with each other to sell their goods. When sellers compete, prices get bid down. Graph It

What If Prices Are Too High? 1) If prices are above equilibrium, there is more supply than demand. Graph It 2) When supply exceeds demand, there is a surplus. Graph It Equilibrium 3) In order to get rid of surplus quantity, the seller must lower the price. In the short run prices may be temporarily above equilibrium. Given time, however, prices will drop to equilibrium (in the long run). This happens because sellers must compete with each other to sell their goods. When sellers compete, prices get bid down. Graph It

What If Prices Are Too Low? 1) If prices are below equilibrium, there is less supply than demand. Graph It In the short run prices may be temporarily below equilibrium. Given time, however, prices will increase to equilibrium (in the long run). This happens because buyers must compete with each other for scarce products. When buyers compete, prices get bid up.

What If Prices Are Too Low? 1) If prices are below equilibrium, there is less supply than demand. Graph It But supply is only 20 Demand is 40 At $36 In the short run prices may be temporarily below equilibrium. Given time, however, prices will increase to equilibrium (in the long run). This happens because buyers must compete with each other for scarce products. When buyers compete, prices get bid up.

What If Prices Are Too Low? 1) If prices are below equilibrium, there is less supply than demand. Graph It 2) When supply is less than demand, there is a shortage. At $36 Graph It In the short run prices may be temporarily below equilibrium. Given time, however, prices will increase to equilibrium (in the long run). This happens because buyers must compete with each other for scarce products. When buyers compete, prices get bid up.

What If Prices Are Too Low? 1) If prices are below equilibrium, there is less supply than demand. Graph It 2) When supply is less than demand, there is a shortage. At $36 Graph It Shortage of 20 In the short run prices may be temporarily below equilibrium. Given time, however, prices will increase to equilibrium (in the long run). This happens because buyers must compete with each other for scarce products. When buyers compete, prices get bid up.

What If Prices Are Too Low? 1) If prices are below equilibrium, there is less supply than demand. Graph It 2) When supply is less than demand, there is a shortage. At $36 Graph It Shortage of 20 3) With so many buyers, sellers will realize they can make more money by increasing price. In the short run prices may be temporarily below equilibrium. Given time, however, prices will increase to equilibrium (in the long run). This happens because buyers must compete with each other for scarce products. When buyers compete, prices get bid up. Graph It

What If Prices Are Too Low? 1) If prices are below equilibrium, there is less supply than demand. Equilibrium Graph It 2) When supply is less than demand, there is a shortage. Graph It 3) With so many buyers, sellers will realize they can make more money by increasing price. In the short run prices may be temporarily below equilibrium. Given time, however, prices will increase to equilibrium (in the long run). This happens because buyers must compete with each other for scarce products. When buyers compete, prices get bid up. Graph It

When Demand Changes 1) When demand increases, it will almost always be true that a) Price increases b) Quantity increases Graph It This is review from a previous lesson on the “Law of Demand.” Make sure students understand the relevance of shifting demand when talking about equilibrium: Whenever demand changes, equilibrium price and quantity will change. Allow students time to draw the graph on their note sheets.

When Demand Changes 1) When demand increases, it will almost always be true that a) Price increases b) Quantity increases $44 Graph It D2 40 This is review from a previous lesson on the “Law of Demand.” Make sure students understand the relevance of shifting demand when talking about equilibrium: Whenever demand changes, equilibrium price and quantity will change. Allow students time to draw the graph on their note sheets.

When Demand Changes 1) When demand increases, it will almost always be true that a) Price increases b) Quantity increases Graph It 2) When demand decreases, it will almost always be true that a) Price decreases b) Quantity decreases This is review from a previous lesson on the “Law of Demand.” Make sure students understand the relevance of shifting demand when talking about equilibrium: Whenever demand changes, equilibrium price and quantity will change. Allow students time to draw the graph on their note sheets. Graph It

When Demand Changes 1) When demand increases, it will almost always be true that a) Price increases b) Quantity increases D2 Graph It $36 2) When demand decreases, it will almost always be true that a) Price decreases b) Quantity decreases 20 This is review from a previous lesson on the “Law of Demand.” Make sure students understand the relevance of shifting demand when talking about equilibrium: Whenever demand changes, equilibrium price and quantity will change. Allow students time to draw the graph on their note sheets. Graph It

When Supply Changes 1) When supply increases, it will almost always be true that a) Price decreases b) Quantity increases Graph It This is review from a previous lesson on the “Law of Supply.” Make sure students understand the relevance of shifting supply when talking about equilibrium: Whenever supply changes, equilibrium price and quantity will change. Allow students time to draw the graph on their note sheets.

When Supply Changes 1) When supply increases, it will almost always be true that a) Price decreases b) Quantity increases Graph It S2 $36 40 This is review from a previous lesson on the “Law of Supply.” Make sure students understand the relevance of shifting supply when talking about equilibrium: Whenever supply changes, equilibrium price and quantity will change. Allow students time to draw the graph on their note sheets.

When Supply Changes 1) When supply increases, it will almost always be true that a) Price decreases b) Quantity increases Graph It 2) When supply decreases, it will almost always be true that a) Price increases b) Quantity decreases This is review from a previous lesson on the “Law of Supply.” Make sure students understand the relevance of shifting supply when talking about equilibrium: Whenever supply changes, equilibrium price and quantity will change. Allow students time to draw the graph on their note sheets. Graph It

When Supply Changes 1) When supply increases, it will almost always be true that a) Price decreases b) Quantity increases S2 $44 Graph It 2) When supply decreases, it will almost always be true that a) Price increases b) Quantity decreases 20 This is review from a previous lesson on the “Law of Supply.” Make sure students understand the relevance of shifting supply when talking about equilibrium: Whenever supply changes, equilibrium price and quantity will change. Allow students time to draw the graph on their note sheets. Graph It

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases Why Is Price Unknown? Point out on the graph how quantity has definitely increased, but price is unknown. The animation will illustrate why price is unknown. Allow students time to copy down the graph.

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases Why Is Price Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases Why Is Price Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases Why Is Price Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases Why Is Price Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases Why Is Price Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases Why Is Price Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases Why Is Price Unknown? Point out on the graph how quantity has definitely decreased, but price is unknown. The animation will illustrate why price is unknown. Allow students time to copy down the graph.

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases Why Is Price Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases Why Is Price Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases Why Is Price Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases Why Is Price Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases Why Is Price Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases Why Is Price Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown Why Is Quantity Unknown? Point out on the graph how price has definitely increased, but quantity is unknown. The animation will illustrate why quantity is unknown. Allow students time to copy down the graph.

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown Why Is Quantity Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown Why Is Quantity Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown Why Is Quantity Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown Why Is Quantity Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown Why Is Quantity Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown Why Is Quantity Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown Point out on the graph how price has definitely decreased, but quantity is unknown. The animation will illustrate why quantity is unknown. Allow students time to copy down the graph. 4) Demand decreases and supply increases a) Price decreases b) Quantity is unknown Why Is Quantity Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown 4) Demand decreases and supply increases a) Price decreases b) Quantity is unknown Why Is Quantity Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown 4) Demand decreases and supply increases a) Price decreases b) Quantity is unknown Why Is Quantity Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown 4) Demand decreases and supply increases a) Price decreases b) Quantity is unknown Why Is Quantity Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown 4) Demand decreases and supply increases a) Price decreases b) Quantity is unknown Why Is Quantity Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown 4) Demand decreases and supply increases a) Price decreases b) Quantity is unknown Why Is Quantity Unknown?

When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown 4) Demand decreases and supply increases a) Price decreases b) Quantity is unknown Why Is Quantity Unknown?

Equilibrium In the News DIRECTIONS Several real newspaper headlines from cnn.com are listed below along with a small excerpt from the story. Each story illustrates a change in supply, a change in demand, or a change in both. For each question determine which market is being described, decide how supply and/or demand is affected, and draw the change on the graph. After you have drawn the graph, determine how price and quantity have been affected. 1) EXPERTS: $4 A GALLON GAS COMING SOON 2) BARNES & NOBLE’S NOOK FLOPS DURING HOLIDAYS 3) BEATING THE COMING WATER SHORTAGE 4) EPA STUDY SUPPORTS MORE NATURAL GAS These are the directions for the Class Activity that is included in the download. You may differentiate instruction by using the three different versions, or you may decide to simply use just one version for the whole class.

“Equilibrium” Learning Targets Reasoning Describe how the market equilibrium price and quantity are determined. Determine the effects on equilibrium price and quantity when demand and/or supply shift. Skill Draw shifts in supply and demand curves.

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