1. 7.4 Putting Supply & Demand Together

2. Bell Work Turn in your 7.3 Worksheet & Guided Reading/Vocab W/S
Complete Graphing W/S
Objectives Today:
Identify how the equilibrium price is determined & how shifts in equilibrium price occur.
Identify how shortages and surpluses affect price.

3. Clarifying Notes for 7.3 W/S
Pay attention to the shifts in the supply curve …
Go to Reinforcing Skills W/S

4. Clarifying Notes for 7.3 W/S
Diminishing Marginal Utility
What 1 word comes to mind when I stress the word utility?
Based on Utility, ppl decide what to buy and how much they are willing to pay.

5. The Law of Diminishing Marginal Utility
Utility for an item is reached when a person values the item LESS than the money paid for it.
$7 stadium dog ok for 1
Whether of not I will buy a 3rd hot dog, is determined by utility.

6. The Law of Diminishing Returns
At some point after increasing units of a factor of production, output will decrease.
See book example on page 192 regarding adding employees.

8. Supply & Demand Work Together
When Price Goes Up Quantity Demanded Falls
Price Goes Down – QD Rises
What really determines prices are the forces that determine supply and demand.
Quantity Demanded & Quantity Supplied both depend on Price

9. The Equilibrium Price
The price at which the quantity demanded and the quantity supplied meet.

10. Shifts in Equilibrium Price