Unit 2, Lesson 2 Cost Analysis Learning Targets: IWBAT graph and explain how firms determine price and output through marginal cost and analysis IWBAT differentiate and draw conclusions about historical economic thought theorized by economists

Preview  In terms of supply and demand, what might happen if doctor determined that movies decreased your life span?

Vocabulary  Supply Schedule: table showing quantities supplied at different possible prices  Supply Curve: upward-sloping line that shows in a graph form the quantities supplied at each possible price  Law of Diminishing Returns: economic rule that says as more units of a factor of production are added to other factors of production, after some point total output continues to increase but at diminishing rates  Equilibrium Price: price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy  Shortage: situation in which the quantity demanded is greater than the quantity supplied at the current price  Surplus: situation in which quantities supplied is greater than quantity demanded at the current price  Price Ceiling: legal maximum price that may be charged for a particular good or service  Rationing: distribution of goods and services based on something other than price  Black Market: “underground” or illegal market in which goods are traded at prices above their legal maximum prices or in which illegal goods are sold  Price Floor: legal minimum price below which a good or service may not be sold

Reading  Textbook Pages: ,

Activity  Supply and Demand Video Supply and Demand Video  Supply and Demand Curve Supply and Demand Curve

Homework  Explain how supply and demand affect the cost of a good or service?  Chapter 8 Notes