If the price of chocolate chip cookies suddenly increased by $5 per dozen at delis across the US, how would this impact the number of cookies that you (and other consumers) would purchase? Why? Are any incentives influencing this decision? Explain.

If the price of chocolate chip cookies suddenly increased by $5 per dozen at delis across the US, how would this impact the number of cookies that you (and other consumers) would purchase? Why? Are any incentives influencing this decision? Explain. If the price of a dozen cookies increased by $5 per dozen (possibly due to an increase in the popularity of cookies), how would this impact the number of cookies that are produced? Why? Are any incentives influencing this decision? Explain.

The Law of Supply & Demand Essential Questions: How does the shape of a demand curve reflect the actions of consumers in the marketplace? How does the shape of a supply curve reflect the actions of producers in the marketplace?

“The Supply and Demand for Cookies” 22 blocks (50 cents each) (in dollars) Price 30 blocks (200 cookies each) Quantity (in dozens)

1. Describe the shape of the demand curve. “The Supply and Demand for Cookies” (in dollars) Price Quantity (in dozens)

Describe the shape of the demand curve. 1. “The Supply and Demand for Cookies” (in dollars) Price Quantity (in dozens)

Describe the shape of the demand curve. 1. “The Supply and Demand for Cookies” A typical demand curve has a downward (negative) slope from left to right. (in dollars) Price Quantity (in dozens)

2. How does the demand curve visually demonstrate the law of demand? “The Supply and Demand for Cookies” (in dollars) Price Quantity (in dozens)

2. How does the demand curve visually demonstrate the law of demand? “The Supply and Demand for Cookies” Law of Demand – more will be demanded at lower prices than at higher prices (an inverse relationship between price and demand) (in dollars) Price Quantity (in dozens)

3. Why will less be demanded at high prices than at low prices? “The Supply and Demand for Cookies” (in dollars) Price Quantity (in dozens)

3. Why will less be demanded at high prices than at low prices? “The Supply and Demand for Cookies” 1. The Income Effect (pg. 96) 2. The Substitution Effect (pg. 96) 3. The Law of Diminishing Marginal Utility (pg. 93) (in dollars) Price Quantity (in dozens)

4. Describe the shape of the supply curve. “The Supply and Demand for Cookies” (in dollars) Price Quantity (in dozens)

4. Describe the shape of the supply curve. “The Supply and Demand for Cookies” (in dollars) Price Quantity (in dozens)

4. Describe the shape of the supply curve. “The Supply and Demand for Cookies” A typical supply curve has an upward (positive) slope from left to right. (in dollars) Price Quantity (in dozens)

5. How does the supply curve visually demonstrate the law of supply? “The Supply and Demand for Cookies” (in dollars) Price Quantity (in dozens)

5. How does the supply curve visually demonstrate the law of supply? “The Supply and Demand for Cookies” Law of Supply – more will be offered for sale at higher prices than at lower prices (a direct relationship between price & supply) (in dollars) Price Quantity (in dozens)

6. Why will more be supplied at high prices than at low prices? “The Supply and Demand for Cookies” (in dollars) Price Quantity (in dozens)

6. Why will more be supplied at high prices than at low prices? “The Supply and Demand for Cookies” At high prices, producers will produce more due to an increased profit motive. They will direct more of their resources to the production of this good or service. (in dollars) Price Quantity (in dozens)

The Law of Supply & Demand Summarizer: How do consumers react to high prices? How do consumers react to low prices? Why? (respond in 3 to 4 lines) How do producers react to high prices? How do producers react to low prices? Why? (respond in 3 to 4 lines)