What Affects Price Lesson 2.8, Group

How Much is Enough? If a market economy is based on personal choice, why does there always seem to be just enough of everything? In a market economy, individual consumers make decisions about what to buy, and businesses make decisions about what to produce. Consumers are motivated to buy goods and services that they need or want. Business owners are driven by the desire to earn profits. These two groups, consumers and producers, together determine the quantities and prices of goods and services produced.

What Affects Price? Supply is how much of a good or service a producer is willing to produce at different prices. Demand is an individual‘s need or desire for a product or service at a given price. Entrepreneurs must consider all the resources that go into producing a good or service at a given price. Fixed costs remain the same regardless of how much of a good or service is produced, while variable costs go up and down depending on the level of production. Market structure is determined by the nature and degree of competition among businesses that operate in the same industry. The four major market structures are perfect competition, monopolistic competition, oligopoly, and monopoly.

Lesson 2.8 – What Affects Price? Group Leader Participant #1 Participant #2 Spectator

Tickets – Price Point You have the last four available tickets to your favorite band’s concert in your area. Name this band. How much are you willing to pay? Describe the Price Range And Why?

Supply and Demand Explain how supply and demand interacted to help you determine your equilibrium point of the price you are going to offer clients to purchase your tickets. Establish the price at which the tickets are currently selling for this event. Are you going to sell the tickets separately or in a group? Explain clearly your reasoning? What are the advantages of your choice?

Supply and Demand Define demand elasticity. Define elastic demand. Define inelastic demand Provide an examples of goods with elastic and inelastic demands. Explain the inelastic demand of your tickets. Explain how the forces of supply and demand work together to determine the price of your tickets in the market place. What effects do supply and demand have on the price of your ticket?

Cost of Doing Business Describe how the costs of doing business affect the price of your tickets being sold.

Think About it. Have you ever wanted to buy something, but you couldn’t find it? What role do you think supply and demand might have played? Student #1 Response: Student #2 Response: Student #3 Response: