 I can DEFINE supply and demand and understand how, together, they determine MARKET PRICES

 2 functions in a ◦ (Demand) ◦ (Supply)  Demand – Define  Supply – Define  Market Economy – Voluntary Exchange ◦ Seller’s problem of ◦ Buyer’s problem of  Demand/Supply SHOWS Cause/Effect with relation to

 I can DEFINE supply and demand and understand how, together, they determine MARKET PRICES

 I can describe the LAW OF DEMAND and what FACTORS affect Demand

 PRICE GOES DEMAND GOES  Demand –  Inverse Relationship  Other Factors that affect Quantity Demanded: ◦ Real Income Effect ◦ Substitute Effect ◦ Law of Diminishing Marginal Utility

 Cannot buy ◦ Known as real income effect on demand  Forces Trade-offs  Real Income =  Works in Opposite also

 2 items nearly the same – Price of one goes up people will buy other

 Define – Utility  People decide to buy goods based on Utility  Law of Diminishing Marginal Utility

 I can describe the LAW OF DEMAND and what FACTORS affect Demand

 I can CREATE and INTERPRET a Demand Curve

 Demand Schedule –  Demand Curve –

 I can CREATE and INTERPRET a Demand Curve

 I can identify Factors that cause a Change in Demand

 Changes in  Substitutes  Complementary Goods

 I can identify Factors that cause a Change in Demand

 I can explain elasticity of demand and the difference between elastic demand and inelastic demand products

 Elasticity – Define  Elastic Demand –  Examples of Products  Inelastic Demand –  Examples of Products

 Substitutes  How much you budget for the good ◦ Smaller percentage budgeted = ◦ Larger percentage budgeted =  Amount of to prepare for change

 I can explain elasticity of demand and the difference between elastic demand and inelastic demand products

 I understand the Law of Supply  I can Graph and Interpret a Supply Curve

 Law of Supply – DIRECT RELATIONSHIP  Profit Incentive at Work  Cancer Video Cancer Video

 Supply Schedule – Table showing quantities supplied at different possible prices.  Supply Curve – Upward sloping line that shows the quantities supplied at each price.

 I understand the Law of Supply  I can Graph and Interpret a Supply Curve

 I can identify factors that cause the Supply Curve to shift right (increasing) or shift left (decreasing)

 Price ◦ Raw materials, LABOR, Energy, Rent/Lease/Mortgage  Technology

 I can identify factors that cause the Supply Curve to shift right (increasing) or shift left (decreasing)

 I understand the interaction of Supply and Demand in a market economy.

◦ To Consumers AND Producers

◦ Can lead to Rationing or Black Market ◦ Minimum Wage!!

 I understand the interaction of Supply and Demand in a market economy.