1. Tuesday
Section 1 Notes
Finish Guided Reading 7-1 & 7-2

2. Chapter 7 Section 1
Supply and Demand

3. Problem: You are a farmer deciding what crop to grown this year.
You can grow 10,000 bushels of one of the following crops. Choose one and write it down:
Corn
Wheat
Soybeans
Oats

4. Calculate how much you earned
What will you plant next year? Write it down.

5. The Marketplace Terms
Demand - The amount of a good or service that consumers are willing to buy at various possible prices during a specified time period.
Supply- the amount of a good or service that producers are willing to sell at various prices during a specified time period
Market - the process of freely exchanging goods and services between buyers and sellers

6. Examples of Markets Stores Services Entertainment Internet Shopping
What do all of these have in common?
Give an example of each type of market.

7. Basis of Market economy
Voluntary Exchange - a transaction in which a buyer and a seller exercise their economic freedom working out their own terms of exchange.

8. The Law of Demand
Definition - economic rule stating that the quantity demanded and price move in opposite directions
Quantity Demanded - the amount of a good or service that a consumer is willing and able to purchase at a specific price

9. Law of Demand Quantity Demanded goes down As price goes up… Quantity
As price goes down …

10. Effects on Demand
Real Income effect - economic rule stating that individuals cannot keep buying the same quantity of a product of its price rises while their income stays the same
Substitution effect - economic rule stating that if two items satisfy the same need and the price of one rises, people will buy more of the other

11. Diminishing Marginal Utility
Marginal utility - an additional amount of satisfaction
Law of diminishing marginal utility - rule stating that the additional satisfaction a consumer gets from purchasing will lessen with each of additional unit purchased

12. Diminishing Marginal Utility
Think of a time when you “had too much to eat”. How would that experience be similar to the law of diminishing marginal utility?