Terrific Tuesday, December 1 OPENING ACTIVITY: Copy the following question and write out its complete answer. Which factor most contributed to improved cell phone technology in recent years? a.Government regulations b.Competition among companies c.Increase in stock offerings d.Abundant natural resources D65

What is Economics? Many people say ECONOMICS is the driving force of human interaction and studying it reveals why people and GOVERNMENTS behave in particular ways. When you think of the word ECONOMICS, what are the first 3 words that come to mind?

“The Economic System at Work” Why you study this in Civics… American economic freedoms include the freedom to buy and sell, to earn a living, to earn a profit, to compete, and to own property. Think/Pair/Share Which of these freedoms have you experienced in your daily lives? How are these freedoms important to the health and well being of US citizens?

Chapter 17-1 The US has a “free market” economy. This means that if you want to start a business, you can. Your success will be determined by your ability to run a business and the market, not by a government agency. This is why the US can be described as having a “market” economy.

Economic Systems The purpose of an economic system is to help people create and obtain the goods and services they want and need. How goods and services are obtained is what distinguishes different economic systems from each other.

Competition for Resources In order to provide a good or service, resources are needed. Resources are not unlimited, so businesses and individuals must compete for the resources they need. This competition eventually affects everyone, not just business owners. HOW? It affects the prices we pay for the goods we want.

Scarcity …is one result of competition for resources....is the combination of limited economic resources & society’s unlimited wants. …is the most basic problem of economics because it forces people to make decisions about how to use society’s resources effectively.

Supply and Demand Changes in prices are usually the result of the laws of supply and demand. These laws are among the most basic of all economic principles.

Law of Supply States that businesses will produce more products when they can sell them at higher prices. Businesses will produce fewer products when prices are low. DOES THIS MAKE SENSE TO YOU? Why wouldn’t a business want to sell more products at a lower price if it meant people would buy more? Think about back-to-school sales. $1 each. No limit. “SALE” = Notebooks #.25 limit Why the limit?

Law of Demand …states that buyers will demand or want a greater quantity of a good when its price is low. As prices rise, the quantity demanded falls, meaning when the price of a good goes up, people buy less of that good. Turn to page 453.

How do businesses use the laws of supply and demand to try to make a profit? To increase their profit, businesses have to find the highest price that customers are willing to pay for the goods or services they offer.

Connect to Math Jan’s Records is selling CDs for $18. Today, Jan sold 5 CDs. Nita’s Music is selling CDs for $12. Today Nita sold 10 CDs. Which merchant made more money? Why? Jan made $90, while Nita made $120. Although Jan wants to supply CDs at $18 a CD, there is limited demand for CDs at that price. In contrast, Nita is supplying CDs at a price which customers prefer, or demand.

What factors might affect the demand for a good or service? Price Quality Usefulness Ease of use advertising

Putting a Price on Things Price or VALUE is based on two basic factors 1. Supply 2. Demand -Supply -the amount of a good or service that is available for consumers to buy -Demand -the amount of a good or service that consumers are willing to buy

Determining Price -Price is determined by comparing the amount of demand to the amount of supply and finding an amount where they are equal --Market or Equilibrium Price this is the point at which supply and demand meet and price is determined

Effects of Price -Shortages -when demand is greater than supply -What happens to price? It goes up -Surplus -When supply is greater than demand -What happens to price? * It goes down.

The Law of Demand-quantity demanded is inversely proportional to price. Simply put, the higher the price, the lower the demand and the lower the price, the higher the demand. In numbers it would look like this chart Demand Schedule for Cookies: At a price ofConsumer will buy.70 cents100 cookies , , ,300 Draw a graph based on the info in the chart.

Economists also like to look at things graphically. It enables them to see the quantity and price on a limitless scale. To do this they plot what is known as a demand curve: The price is always on the vertical axis (y) and the quantity is always on the horizontal axis. (x) If we were to plot our points and draw a demand curve for the cookies it would look like this graph.

Elasticity -Elasticity -Is the degree to which a change in price affects the demand for the product -Elastic Demand -a change in the price DOES affect the quantity demanded -Inelastic demand -change in the price does NOT affect the quantity demanded

Exit Ticket (write in your NB) State one thing you learned about the Law of Supply. State one thing you learned about the Law of Demand. State the difference between elastic demand and inelastic demand.