1. Do Now  Explain what the 4 determinants of demand are…  What is the law of supply as prices go up supply…

2. Do Now  Which determinant of supply deals with the profits/expenditures businesses incur?  The market-clearing price is where what two curves intersect?

3. The Price System STANDARD 1.3.3

4. The Price System  Price is the language of economics  *The interaction of supply and demand determines the equilibrium price*  This equilibrium price is the compromise we live by everyday  http://www.criticalcommons.org/Members/fsustavros/clips/cs e-1-4-stossel-2011-economics-of-voluntary-1/view http://www.criticalcommons.org/Members/fsustavros/clips/cs e-1-4-stossel-2011-economics-of-voluntary-1/view

5. Market Equilibrium Market Equilibrium is when quantity supplied and quantity demanded are equal – Perfection!!!! Supply curve and demand curve intersect

6. Where does Equilibrium Occur on this chart?  At what price does equilibrium occur? How do we know again?

7. Supply-Demand Market Equilibrium D D A S S 906070804050 $500 Price per Xbox 360 Quantity in Billions of Xbox 360 per Year 450 400 E 350 300 g 250 300 200 a

8. Shortage: “Not Enough!!” With shortages, price tends to rise until equilibrium is restored Things that might happen… –- Black markets –- Rationing – - Violence

9. Surplus: “Having too much” With surpluses, prices tend to fall until equilibrium is restored Things that might happen… –- Little re-sale value –- Lack of consumer interest –- Worthlessness

10. Managing Prices  Sometimes Governments set prices to protect producers and consumers  Price Ceiling: Government action that establishes a maximum price for a certain good  Price Floor: Government action that establishes a minimum level of prices.  Anything below it illegal

11. Please Sketch

12. Chapters 5 Part III Managing Prices  Explain why governments sometimes set prices.  Explain what governments try to accomplish through price floors and price ceilings, and rationing  Explain what happens when governments manage prices

13. Do Now  Define Equilibrium  Under what conditions does this event exist?

14. What’s a price ceiling? CONTINUE

15. Price Floor Example  An important example of a price floor is the **minimum wage**  Minimum Wage: the lowest allowed by the law in a state or country  A business cannot pay an employee lower than what the federal gov’t says (illegal)

17.  Do Now: In your opinion what is the “language” of economics?

18.  What are some benefits of raising the minimum wage?  What are some negatives of raising it?

19.  http://www.whitehouse.gov/raise-the- wage?utm_expid=24505866-22.orh-8EtwQu- dGtoBaX9aiA.0 http://www.whitehouse.gov/raise-the- wage?utm_expid=24505866-22.orh-8EtwQu- dGtoBaX9aiA.0  http://www.myfoxdetroit.com/story/26445639/arrests -after-fast-food-wage-protesters-block-mack- avenue http://www.myfoxdetroit.com/story/26445639/arrests -after-fast-food-wage-protesters-block-mack- avenue  http://www.nytimes.com/video/us/politics/10000000 2676720/obama-on-raising-the-minimum-wage.html http://www.nytimes.com/video/us/politics/10000000 2676720/obama-on-raising-the-minimum-wage.html  https://www.youtube.com/watch?v=Z0xVojIYA-o https://www.youtube.com/watch?v=Z0xVojIYA-o  Michigan's minimum wage increased from $7.40 per hour to $8.15 per hour on Sept. 1., the equivalent of $16,952 per year for a 40- hour work week. An increase to $15 per hour would equal $31,200 per year for a 40-hour work week.

21. Anti-Minimum Wage  Businesses tend to fight against a higher minimum wage because their total costs will increase if they have to pay their employees more wages

22. Writing Tracker  Should we raise the minimum wage? Explain using examples and following the new structure

23. DO NOT WRITE Prisoner B stays silent Prisoner B Betrays/Testifie s Prisoner A Stays Silent Each serves 1 year Prisoner A 20 years Prisoner B goes free Prisoner A Betrays/Testifie s Prisoner A goes free Prisoner B 20 years Each serves 10 years

24. Writing Tracker Help:  Thesis: Statement of Purpose  Body Paragraph with intro Topic Sentence Reiterating your main idea  Evidence: Back up your argument with facts and “DATA”  Counter Argument: What the other side might say and why they are wrong  Conclusion: Restate Thesis

25. DO NOT WRITE  Because betraying a partner offers a greater reward than cooperating with them, all purely rational self- interested prisoners would betray the other, and so the only possible outcome for two purely rational prisoners is for them to betray each other  http://www.investopedia.com/vide o/play/prisoners-dilemma/ http://www.investopedia.com/vide o/play/prisoners-dilemma/

26. Problems with Price System  Public Goods: any good or service that is consumed by ALL members of a society  Police Protection, Fire protection, Schools

27.  https://www.youtube.com/watch?v=p3Uos2fzIJ0 https://www.youtube.com/watch?v=p3Uos2fzIJ0  Prisoners Dilemma Game Show!