1. Sponge: Friday, February 10
If the prices of tooth paste and deodorant rise, are you likely to buy less of them?
What could a retailer (store) do to get rid of a lot of extra inventory on its shelves?
Who wants to discuss their current events?
We’ll have a check point after the sponge.
Two assignments are due today: current event & questions from orange EOCT book!

2. Sponge: Monday, February 13
What is the definition of productivity?
If a producer of CDs decreases its input of plastic and its output (# of CDs produced) remains the same, what has happened to productivity? (increased, decreased, remained the same?)

3. SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits work to determine production and distribution in a market economy.
c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.

4. Video: Equilibrium

5. Market Equilibrium When buyers and sellers can freely make production and purchase decisions, the price of a product will move toward market equilibrium. At this point, the quantity supplied is exactly equal to the quantity demanded.

6. The Price Adjustment Process
Supply and demand curves intersect to form the equilibrium price.
A surplus is any unsold product or service.
Sellers lower prices to attract more buyers.

7. The Price Adjustment Process
A shortage exists when supply does not meet demand.
Prices and quantities will go up to meet demand.

8. What will happen when prices are too high and there is a surplus
What will happen when prices are too high and there is a surplus? What will happen when there is a shortage?

9. SSEMI3 The student will explain how markets, prices, and competition influence economic behavior.
b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create shortages

10. Influencing Market Outcomes
Price ceilings and price floors prevent the market from determining prices that allocate goods and resources.
Sometimes the price system cannot accurately inform buyers and sellers in the market.

11. Influencing Market Outcomes
Price ceiling is the maximum price set by law that can be charged for a product; example: rent control laws in NYC
Advantages:
Achieve social goals of equity and security
Some individuals are happy
Individuals who could not afford the market price now may be eligible

12. Influencing Market Outcomes
Price ceiling disadvantages
Demand becomes too high.
Suppliers face lower profits.
Suppliers limit service or leave market altogether.

14. Influencing Market Outcomes
Price floor is the lowest price set by law that can be paid for a good or service
Minimum wage is an example: this is the lowest legal wage that can be paid to most workers

15. Price Floors Advantages: Price floor disadvantages:
Minimum wage raises poor people’s incomes and provides a measure of equity
Price floor disadvantages:
Employers hire fewer workers at higher wages, therefore results in an increase in unemployment

17. Whiteboard Activity
For these goods and services, how do you think consumers might respond to changes in price? I.e., how much will demand change when prices go up or down?
Prescription glasses
Car batteries
Movie tickets
Pain medication
Gasoline
Fresh peaches

18. c. Define price elasticity of demand and supply.
SSEMI3 The student will explain how markets, prices, and competition influence economic behavior.
c. Define price elasticity of demand and supply.

19. Essential question:
How do consumers and producers respond to changes in price?

20. Elasticity
An important cause-and-effect relationship in economics is elasticity.
Elasticity = a measure of responsiveness that shows how one variable responds to a change in another variable
The more a change in price affects supply and/or demand, the greater a product’s price elasticity

21. Elasticity of Demand Demand can be
Elastic: a change in price causes a relatively larger change in quantity demanded, like fresh produce
Inelastic: a change in price causes a relatively smaller change in quantity demanded, like table salt

22. Elasticity of Demand
The answers to three questions help determine a product’s demand elasticity.
Can the purchase be delayed?
Are adequate substitutes available? (how many and at what cost?)
Does the purchase use a large portion of income?

23. Elasticity of Demand: Examples
Elastic: If the cost of hot dogs is raised from $2 to $6, demand for hotdogs will decrease significantly because many people who would buy a dog at $2 will not pay $6 for one

24. Elasticity of Demand: Examples
Inelastic: If the cost of having a dentist treat an infected tooth rises from $500 to $650, demand will likely not drop because people who are in pain still need the treatment

26. Homework: Due Thursday, Feb. 16
Read pages 46 to 51 in your orange EOCT book and answer questions on pages 48, 51, and 52-54

27. Work Period: Monday, February 13

28. Sponge: Tuesday, February 14
Define substitute goods and give three examples of sets of substitute goods. What happens to the demand for one good when the price of one of its substitutes increases?
Define complementary goods and give three examples of sets of complementary goods. What happens to the demand for one good when the price of one of its complements increases?

29. SSEMI4: Explain the organization and role of business and analyze the four types of market structures in the U.S. economy
Compare and contrast three forms of business organization—sole proprietorship, partnership and corporation

30. Interest Rates as an Economic Factor
Interest rate= amount of money a borrower pays to a lender in exchange for a loan
Interest is charged by banks, credit-card companies, credit unions, student-loan companies, pay-day lending companies
AND
Interest rate= amount earned on most bank accounts and savings accounts

31. Interest Rates as an Economic Factor
When interest rates are high, consumers are more likely to save than spend
They want to earn a high rate on their saved $$, rather than pay high rates on credit cards or large purchases
Demand is lower so prices tend to fall to encourage spending
When interest rates are low, consumers are more willing to spend
Demand and prices tend to rise

32. Tree Maps Create a tree map that includes supply and demand
Sub-categories for each should include:
The law of each one (i.e., Law of Supply and Law of Demand)
Factors that can cause a shift in supply or demand
Examples of elastic and inelastic supply and demand

33. For your business structure:
Define/describe the entity
List advantages
List disadvantages
Come up with a business that would be well suited for your business structure
Describe your business
List three elements of your business that led you to believe that it would benefit from the business structure that you were assigned