Wed., 11/12 Think back to Halloween! Think back to Halloween!  What was the price of Halloween candy on November 1 st, compared to the afternoon of October 31 st ?  What is the need for Halloween candy on November 1 st, compared to the afternoon of October 31 st ?

Supply and Demand Graphing, Notes, and Lots and Lots of Practice!!!

The Basic Graph (aka “The Starting Point”)

What do the letters mean?  X axis = Q = Quantity  Y axis = P = Price  D = Demand  S = Supply

The Basic Graph (aka “The Starting Point”) Equilibrium

What do the letters mean?  “The Intersection” = Equilibrium (shows perfect supply/demand)  Q* = Quantity Demanded/Supplied (at the equilibrium price)  P* = Equilibrium Price

Definition for Supply  The total amount of a good or service producers are willing and able to make at all prices at a specific point in time.

Law of Supply (movement)  States that as the price increases (or decreases) the quantity supplied also increases (or decreases). or

Determinants - things that could shift (change) the SUPPLY of a product  Price and availability of land, labor and capital (OJ v. cold winter)  New technology (cotton gin)  Number of other sellers (grocery stores in M’town)

Determinants – things that could shift (change) the SUPPLY of a product, cont.  Price of other goods someone could produce (fresh fruits and/or vegetables in the summer v. winter)  Taxes (if they increase overall cost goes up too)

Graphing a Shift in Supply (start w/ the basic graph) S2

Graphing a Shift in Supply  The NEW supply line (S2) is called the Supply Curve. That’s Crazy – it’s a straight line! (don’t let that throw you off) That’s Crazy – it’s a straight line! (don’t let that throw you off)

Graphing a Shift in Supply (show the new price/quantity) S2 P2 Q2

Definitions for Demand  The total amount consumers are willing and able to buy at all prices at a specific point in time.

Law of Demand (movement)  States that as the price increases (or decreases) the quantity demanded decreases (or increases). or

Determinants - things that could shift (change) the DEMAND for a product  Tastes and fads (Q’back jerseys)  Income (BMW dealerships in area)  Number of buyers (Burger King)

Determinants - things that could shift (change) the DEMAND for a product, cont.  Future price expectations (SUVs - when gas increases)  Price and availability of Substitutes (“Uggs” v. “Fuggs”) Substitutes (“Uggs” v. “Fuggs”) Compliments (jam/jelly w/ PB) Compliments (jam/jelly w/ PB)

Graphing a Shift in Demand (start w/ the basic graph) D2

Graphing a Shift in Demand  The NEW Demand line is called the Demand Curve. That’s Right Folks – it’s also a straight line! That’s Right Folks – it’s also a straight line!

Graphing a Shift in Demand (show the new price/quantity) P2 Q2 D2

I R D L Always remember it so you know whether to shift right or left (for either supply or demand)...

I R D L stands for...  Increase  Right  Decrease  Left

Let’s Try It! Imagine you are reading a newspaper and come across the following headlines...

Two Major Computer Manufacturers Build Five New Factories

You always want to ask the same series of questions to help you understand the information that you will be graphing.

Two Major Computer Manufacturers Build Five New Factories  What is the market you are graphing?  Computers  Does it deal with Supply or Demand?  Supply  Does supply increase or decrease?  Increase  Does the supply curve shift to the right or left?  Right

Supply of computers increases because more factories are built. P2 Q2 S2

Doctors announce benefits of eating ice cream daily Try Another

Doctors announce the benefits of eating ice cream daily  What is the market you are graphing?  Ice Cream  Does it deal with Supply or Demand?  Demand  Does demand increase or decrease?  Increase  Does the demand curve shift to the right or left?  Right

Demand for ice cream increases for health reasons P2 Q2 D2

Car Manufacturer Announces Plans for SUV Price Increase in Two Months Here’s a Tricky One

Don’t forget to ask the questions...  What is the market you are graphing?  Does it deal with Supply or Demand?  Does supply/demand increase or decrease?  Does the supply/demand curve shift to the right or left?

Demand for SUVs NOW! P2 Q2 D2

Always read the headline for what it is right now! Try not to read into it too much! Keep it simple!

Smart Board Graphing

Closer – 11/12 Answer the following question in complete sentences: What is the incentive for you to behave and study in your classes?

Toyota unveils new car that gets 97 mpg!

Don’t forget to ask the questions! What is the market you are graphing? Does it deal with Supply or Demand? Does supply increase or decrease? Does the supply curve shift to the right or left?

Demand increases for Toyotas with great gas mileage P2 Q2 D2

Protected Owls Discovered in Lumber Forest! Companies told to discontinue logging.

Don’t forget to ask the questions! What is the market you are graphing? Does it deal with Supply or Demand? Does supply increase or decrease? Does the supply curve shift to the right or left?

Supply of lumber (logging) decreases due to protection of owls S2 P2 Q2