In your Interactive Notebook: Unit. Day 6. 2 & 6 In your Interactive Notebook: Unit.Day 6.2 & 6.3 Supply, Demand, and Price ON YOUR DESK: 1) 2) Interactive NB 3) (Completed) Study guide WARM UP Name and describe three supreme court cases and the ruling in each case. Today’s Agenda Warm up & review Supply & Demand Activities & Notes Review Packets Today’s OBJECTIVE(S): WRITE DOWN: I can define the law of supply and demand I can graph supply and demand to find an equilibrium price

Updates & Deadlines: (use assignment log!!!) Daily: FINAL EXAM PACKET 12/19: Supply & Demand Practice Worksheet 12/20: QUEST; Division of labor, outsourcing, etc. 1/6: Economic Systems Skits 1/7: Free Trade & Globalization; DEADLINE FOR REVIEW PACKETS & LATE WORK 1/8, 1/9, 1/10: APPLIED REVIEW EXTRA CREDIT: ACES Paragraph: How do credit scores affect interest rates? FINAL EXAMS: 1/13: 2nd Period 1/14: 4th Period 1/15: 1st Period 1/26: 3rd Period

Adam Smith Wrote The Wealth of Nations Said that governments should stay out of economics and leave choices to individuals

Laissez-Faire Term meaning “let it be/go” Government does not interfere in the economic system

Theory of Supply and Demand Argues that free market COMPETITION is the best way to set prices Let suppliers compete for the highest profit Let consumers compete for the lowest price Everything will work itself out

Capitalism Argues that people are motivated by: The “profit motive” Self-interest Personal profit The “profit motive”

The Invisible Hand Smith believes that the forces of supply and demand work as an “invisible hand” to guide the market People don’t control it, but… It is based on human nature: We want to maximize profits We want cheap stuff

GRAPH Analysis Supply & Demand

Key Vocabulary for today: Supply Demand Price Surplus Shortage Productivity Profit motive Equilibrium price

Supply and Demand

Question What will happen to price if I have more candies? Less? What will happen to price if I can sell a lot of something?

Supply & Demand Jars Use the arrows to indicate what will happen to supply, demand, or price in each example.

Demand Desire, willingness, AND ability to buy a good or service ALL 3 are important

Law of Demand People are usually willing to buy more of a product at a low price than a high price http://www.youtube.com/watch?v=HEhKoIUlbYM&feature=related

Supply The quantities of goods or services that producers are willing to sell Also have to consider scarcity of resources

Law of Supply Suppliers will provide more goods if they can charge a higher price for them (and less goods if they are selling for less) http://www.youtube.com/watch?v=c9IwnbV0iow&feature=related

Price The amount of money paid for a good or service

Supply and Demand Curve

Practice Activity Complete the practice sheet individually Check work with me as you go Work on Review Packet

Supply and Demand Curve

Surplus, Shortage, Equilibrium Surplus Supply is greater than demand (price too high) Shortage Demand is greater than supply (price too low) Equilibrium price Neither surplus nor shortage (price just right)

What can affect demand?

Demand influenced by 4 factors: Changes in population Changes in income Changes in tastes Changes in expectations Changes in supply / availability Related goods (substitutes & compliments)

expectations If you know the price is going to drop later, you will wait to buy If you know the price will go up, you will buy now.

Utility The pleasure, usefulness, or satisfaction that we get from using a product

Marginal Utility The amount of satisfaction that we get from each additional unit we consume Tends to go down the more we consume The more we have of something, the less we value it

Influences on supply Cost of resources Productivity Technology Government policy Taxes Expectations Number of suppliers competition

HOMEWORK COMPLETE THE WORK ON BACK OF YOUR NOTE ORGANIZER

Quick Quiz 1. This is caused by having limited resources and unlimited wants. 2. This term refers to what a person loses the chance to do when they make a trade off choice. A. Trade-off B. Scarcity C .Demand D. Supply E. Opportunity Cost F.Equilibrium Price

Quiz - continued 3. The law of ________ says that people are usually willing to buy ______ of a product when the price is lower. 4. The law of _______ says that producers are usually willing to sell _______ of a product when the price is _______.

Quiz 5. What happens to the price of carrots if Carrot Cake becomes the world’s most popular desert?

When demand is greater than supply. When supply equals demand. A store is likely to offer a sale on a product when it has this. Surplus Shortage Equilibrium Utility Price

Quick Quiz – OPEN NOTE B - This is caused by having limited resources and unlimited wants. E - This term refers to what a person loses the chance to do when they make a trade off choice. Trade-off B -- Scarcity Demand Supply E -- Opportunity Cost Equilibrium Price

Quiz - continued 2. The law of DEMAND says that people are usually willing to buy MORE of a product when the price is lower. 3. The law of SUPPLY says that producers are usually willing to sell more of a product when the price is HIGH.

Quiz 4. What happens to the price of carrots if Carrot Cake becomes the world’s most popular desert? IT GOES up…

B - When demand is greater than supply. C - When supply equals demand. A - A store is likely to offer a sale on a product when it has this. Surplus Shortage Equilibrium Utility Price