How Supply & Demand Affects Prices In this PP you will discuss the terms elastic/inelastic, normal vs. inferior, normal vs. inferior, substitution vs. complementary. At the end you can use the Association Game under “reteaching/Activties” in the teaching guide. (you will need to prepare and make class sets of) You can also use the Demand Review worksheet that reviews these terms. Note: Provide students with a vocabulary worksheet to write down their defintions.

What does it mean to be elastic? Give all the students a rubber band. (trust is an issue here) Give a few a rubber band as volunteers. Ask the students this questions and elicit answers. Make the connection to the economy and good.

When the demand for a good changes in response to change in price. Elastic When the demand for a good changes in response to change in price. Example $599.00 July 2007 $399.00 September 2007 $249.99 2010 Stop the slide after the price in 2007 and ask if anyone bought the phone then. Show the change in price. Ask students how many own an iphone now. Ask why they bought an iphone now rather than back in 2007. Explain elastic from these examples. $$$ Price Demand

When the demand for a good changes in response to change in price. Inelastic With a partner try and come up with a definition for inelastic. Remember that we are referring to demand. Try and finish the sentence for inelastic. Inelastic When the demand for a good … Elastic When the demand for a good changes in response to change in price. does not change (or changes very little) in response to change in price. Allow students to come up with their own definition and then have a class discussion of their definitions. You can point out that the prefix –in means not so it’s the opposite of elastic. (ELL’s will need help identifying the new word) Introduce the deodorant and ask How many of you bought deodorant in 2007? How many of you buy deoderant in 2010? Use this example to explain inelastic. $2.50 2007 $3.50 2010

With a partner decide if each example is elastic or inelastic. #1 #2 #3 #4

Elastic or Inelastic With a partner, come up with other examples of projects that are elastic or inelastic.

Normal vs. Inferior Goods

If your income increased what’s the first thing you would you buy? Normal Goods If your income increased what’s the first thing you would you buy? Finish this sentence with a partner: I would buy a…..

Normal Goods $249.99 This is the projected price for the next 3 years. It’s Christmas time and everyone just received $300 from family. What are you going to buy? You really want this phone, but you don’t have the money. Grab a random object in the class and assign a price to it. Tell the students that the price won’t change even though thousands of kids want this phone. Demand for the phone increases, but the cost stays the same.

What Does Inferior Mean?

Inferior Goods Vs. Vs. Vs. What is an inferior good? Which one is the inferior good? Have students define inferior good with a partner. What is an inferior good? Vs.

Normal & Inferior Goods Turn to your shoulder buddy and make a list of normal vs. inferior examples. Normal Inferior Goods

Substitute or Complementary Goods

Which item would you purchase? Why? Substitution Good Which item would you purchase? Why? $2.49 $4.99 If the cost of butter increases, the demand for margarine increases. First ask what is a substitution for margarine. Let students guess butter. Show the prices and ask them they stated question. Ask students what is a substitution good for coffee. Show the price and ask they the question. Explain the concept of substitution good. explain subsitution good. $3.75 $1.25 If the cost of coffee increases, the demand for tea increases.

Complementary Good It’s July 4th and is having a sale on hot dog buns. What are you going to buy to go with the hot dog buns? Summer 2010, there was a massive recall on peanut butter. People stopped buying peanut butter. What other complementary good would people have stopped buying? Ask if there are other complementary goods they can think of.

Association Game Depending on your available time consider doing the “Remediation: Association Game” found in the IG. You can use this as a warm up, wrap up, or part of instruction.