Review HW (Section Reviews) Review HW (Section Reviews) Chapter 2 Quiz Chapter 2 Quiz QOD #8: High Priced Athletes QOD #8: High Priced Athletes Law of Demand (Graph it!) Law of Demand (Graph it!) Demand Curves Demand Curves Diminishing Marginal Utility & Apples Diminishing Marginal Utility & Apples HW :Looking for Supply & Demand Part 1 HW :Looking for Supply & Demand Part 1Looking for Supply & DemandLooking for Supply & Demand Ch 3, Section 1 Review pg 70 #1 a-j, 3, 4, 5, 7 AGENDA Tues 1/31 & Wed 2/1

Fans often complain that athletes get paid too much money and that these higher salaries lead to higher ticket prices. 1. Do you agree or disagree with this statement? Higher ticket prices lead to lower sales. Higher ticket prices lead to lower sales. 2. Why does this happen? 3. Why would they raise ticket prices? If the Lakers sell 20,000 tickets at $25 and only sell 12,000 at $30, which ticket price brings in more total revenue? If players salaries go up from $300,000 to $325,000 per game what price would you sell your tickets at? The attendance numbers from above still apply. What do you think might cause ticket prices to go up?

 demand refers to the buying side  supply refers to the selling side

 markets are places where people come together to buy and sell goods or services ex: swap meet, stock market, grocery store, E-Bay  good is a tangible item [product] that gives a person utility or satisfaction Utility: something that is useful or designed for use  service is an intangible item that gives a person utility or satisfaction

 Demand- is the willingness and ability to purchase a good or service.  willingness to purchase refers to a person’s want or desire for a good  ability to purchase means having the money to pay for the good.  You may want something but may not have the ability to pay for it.  There is no demand unless BOTH components are there.

 Law of Demand  as the price (P) of a good increases, the quantity demanded (Q D ) of the good decreases  as the price of a good decreases, the quantity demanded increases  Inverse Relationship between P and Q D  Quantity Demanded (Q D )  the number of units of a good purchased at a specific price

Law of Demand (where P = price and Q D = quantity demanded If P  then Q D  If P  then Q D 

 Quantity demanded - refers to the number of units of a good purchased at a specific price. (It is always a number.)  See example on pg 67

 A demand schedule a numerical chart that illustrates the law of demanddemand schedule  A demand curve is graphic representation of the law of demand  is a graphic plotting of various price-quantity comparisons

 The law of diminishing marginal utility (satisfaction) says that as a person consumes additional units of a good that eventually the utility (satisfaction) gained from each additional unit of the good decreases.  You get more utility (satisfaction) from the first Chipotle burrito that you eat then you do from the 2 nd, 3 rd, and 4 th burrito that you eat.

As goods consumed increased the usefulness of that good decreases. Is your fifth Chipotle burrito as useful as your first? or?

TThe more satisfaction (utility) you receive from a unit of good the higher price you are willing to pay for it. TThe less satisfaction (utility) you receive from a unit of good the lower price you will pay for it. HHow much will you pay for that 1 st Chipotle burrito? 22 nd ? 3 rd ? 4 th ?

 caveat emptor: let the buyer beware – the buyer has the duty: 1. to make informed decisions 2. to inspect the product 3. to make payments as contracted  Buyers have the responsibility to become informed about the goods they buy.  Once a buyer agrees to purchase a good, he has the ethical responsibility to pay the seller the agreed-upon price.

After completing your handouts…  Create a chart and graph for your own item. Create a value for the first item through the sixth.  Once you’ve created your own table and chart answer these questions:  What would have to change to make your demand of the item change (Other than price, because price only changes the quantity or amount)?  Write a short paragraph describing your graph and chart. Why is the sixth item worth less than the first? Why did you choose the values that you did? (in other words put your graph into words).

 Section 1 Review pg 70  1 a-j, 3, 4, 5, 7  Looking for Supply & Demand Project Part 1