Unit 2.3 Supply & Demand.

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Presentation transcript:

Unit 2.3 Supply & Demand

Unit 2.3 Supply & Demand Widget Function A general name for a new product a manufacturer creates A rule by which the response variable responds

Unit 2.3 Supply & Demand Supply Demand Widgets produced by the Wholesaler Widgets purchased by customers

Unit 2.3 Supply & Demand Wholesale Markup Retail Price which suppliers sale to retailers Amount retailers add to their wholesale price Price retailers charge customers

Unit 2.3 Supply & Demand Equilibrium Market condition whereby supply and demand intersect

How do manufacturers decide the quantity of a product they will produce? What are the dangers of a business manufacturing more products than needed? What are the dangers of a business underproducing needed products? Do you know of any products that are difficult to find because stores do not always have them in stock?

Example 1 The Wacky Widget Company sells widgets for $2.00 each wholesale. A local store has a markup of $1.59. What is the retail price?

CHECK YOUR UNDERSTANDING The wholesale price of an item is x dollars. The retail price is r dollars. Express the markup algebraically.

Example 2 The Robear Corporation sells teddy bears at a wholesale price of $23.00. If a store marks this up 110%, what is the retail price?

CHECK YOUR UNDERSTANDING A banner company sells 5-foot banners to retailers for x dollars. The St. James Sign Shop marks them up 90%. Express the retail price at the St. James store algebraically.

EXAMPLE 3 The graph shows the supply and demand curves for a widget. Explain what happens if the price is set at $9.00.

CHECK YOUR UNDERSTANDING Use the graph to explain what happens if the price is set at $15.00.

EXAMPLE 4 A company wants to base the price of its product on demand for the product, as well as on expenses. It takes a poll of several of its current retailers to find out how many widgets they would buy at different wholesale prices. The results are shown in the table. The company wants to use linear regression to create a demand function. What is the equation of the demand function? Round the slope and y- intercept to the nearest hundredth.

CHECK YOUR UNDERSTANDING Explain why it makes sense that the demand function has a negative slope.