Tutorial 2

Supply and demand

Learning Intention To understand the concept of supply and demand using practical examples. I can:  identify examples of supply and demand.  define key terms relating to supply and demand.  use the skeleton island activity to explain supply and demand.  understand Stage 1 taskcards for Unit 1. Success Criteria

Average NBA player wage: $4.9 million LeBron James’ Wage: $24 million Price of a kilogram of gravel = $55 Price per kilogram for a diamond = $1 million 2002 Holden Monaro = $20, Holden Monaro = $150,000 Why????

Supply and demand theory The supply or demand for a good affects its price. If a product has a low price, usually more people are prepared to buy it. DEMAND: If an iPad cost $5, most of us would probably buy one. Low prices usually increases the demand. If ballpoint pens cost $50 each, most of us would use pencils and not purchase pens. High prices usually decrease the demand.

Supply and demand theory SUPPLY: The supply of a good is affected by what it cost to make it. No business would want to sell an iPad for $5 because they would not make any money off it, in fact they would probably lose money! So a business decides a price that it will make a profit (or break even) when selling that product.

Supply and demand theory There is a good balance in an economy when:  there are enough goods supplied to meet consumer demand.  all suppliers make a reasonable profit.  consumers consider goods to be value for money.

Fun Fact Long ago, when houses made of wood were first being built, nails were very expensive. Each nail had to be made by hand, pounded into shape by a blacksmith. Though it wasn't difficult, it took time. Even a good blacksmith wouldn't be able to make more than a few hundred nails in an entire day. Nowadays, there are machines that can manufacture thousands of nails an hour. Because they are so much easier to acquire now, or because there is a greater supply of nails, the price has dropped substantially.

AFL Finals: Case study The prices of flights from Perth to Melbourne during Grand Final week went up once the West Coast Eagles made the 2015 AFl Grand Final. Why do you think this occurred? cle /AFL-fans-relieved- Virgin-adds-flights-Perth- Melbourne-year-s-grand-final-cost- ticket-London.html /west-coast-eagles-fans-race- to-reach-mcg-for-afl-grand- final/

CASE STUDY 2 This video shows a scenario at a Wedding dress sale. Describe how this relates to supply and demand? Why does Monica (main character) act the way that she does?

Example 3: Cyclone Larry In 2006, Cyclone Larry tore through North Queensland destroying Australia’s banana crops. The 300km/h winds led to the destruction of 80% of Australia’s banana supplies, with estimates putting the damage to the crops at around $400 million. Banana prices increased from $3/kilo to over $12/kilo after Cyclone Larry. With a shortage of Australian grown bananas, prices stayed high for over a year!

Watch: Supply and Demand Explained =RP0j3Lnlazs

Define Supply: Demand: Surplus: Shortage:

Define: Supply: How much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving the correct price. Demand: How much (quantity) of a good or service is desired by buyers. Surplus: An amount of something left over when requirements have been met; an excess of production or supply. Shortage: A situation in which something needed cannot be obtained in sufficient amounts.

Skeleton Island Game

Taskcard time look at the Humanities taskcards and choose one that suits your level.