1. The Market Supply and Demand Together Reference 5.1

2. Write a paragraph in your spiral to answer the following: Suppose the price of bread at the grocery store is $2.00. Explain why it’s $2.00. Why isn’t it $1.25 or $3.00?

3. Use supply and demand curves to understand how price is set. Consider a supply and demand curve on one graph. Consider e-bay and how price is set by bidders Consider an imaginary commodities market. –In the text, read 5.1, pages 110-112. Copy the graph in exhibit 5-1 in your spiral. –Plot each of the bullet points using a-e. Write a definition for each key term in the reading

4. In the text, read 5.1, pages 110-112. Copy the graph in exhibit 5-1 in your spiral. –Plot each of the bullet points using a-e. Write a definition for each key term in the reading Read and note the rest of the section. For next: Why do prices fall when there is a surplus? Rise when there is a shortage?For next: Why do prices fall when there is a surplus? Rise when there is a shortage?

5. Review: On a graph, the point where supply and demand intersect is called equilibrium Equilibrium in a market exists when the quantity of a good demanded is equal to the quantity of a good supplied. That point is the equilibrium price A change in equilibrium price can be brought about by changes in supply and/or demand.

6. Review When there is a greater quantity demanded than quantity supplied = shortage When there is a greater quantity supplied than quantity demanded = surplus MARKETS MOVE TO EQUILIBRIUMMARKETS MOVE TO EQUILIBRIUM A change in equilibrium price can be brought about by changes in supply and/or demand.

7. What could cause an increase in demand? What happened to price? Preferences Number of buyers Price of related goods Income Describe a situation where this might occur…

8. What could cause an increase in supply? What happened to price? Technology Resource prices Gov. actions Number of Sellers Describe a situation where this might occur…

9. What could cause a decrease in demand? What happened to price? Price of related goods Preferences Income Describe a situation where this might occur…

10. What could cause a decrease in supply? What happened to price? resource prices Weather Gov. action Describe a situation where this might occur…

11. Practice Time For each of the following scenarios, draw and write what would happen to supply, demand, equilibrium price and equilibrium quantity. Explain the reason. –A company that makes cables for computer networks invents a way to lower the cost of making their cables. –With significantly cheaper prices for computers, more people can buy computers. What might happen to the market for Internet service? –Gas prices start to increase dramatically. What happens to the market for SUVs that get bad gas mileage? –A very flashy ad campaign for little-known brand of ice tea increases its popularity among consumers. The company is ready to make any amount of iced tea necessary to satisfy changes in demand.

12. Draw and write what would happen to supply, demand, equilibrium price and equilibrium quantity. Explain the reason. 1.Label the graph with the good. 2.Draw graph w/ D 1 and S 1 3.Demand or Supply shift? 4.Factor? 5.Direction of Shift? 6.Original Equilibrium price? 7.New Equilibrium price? 8.What happened to price? Sentence to explain reason for price change. A company that makes cables for computer networks invents a way to lower the cost of making their cables Cables S 1 D 1 S2S2 P

13. Practice Time For each of the following scenarios, draw and write what would happen to supply, demand, equilibrium price and equilibrium quantity. Explain the reason. –A company that makes cables for computer networks invents a way to lower the cost of making their cables. –With significantly cheaper prices for computers, more people can buy computers. What might happen to the market for Internet service? –Gas prices start to increase dramatically. What happens to the market for SUVs that get bad gas mileage? –A very flashy ad campaign for little-known brand of ice tea increases its popularity among consumers. The company is ready to make any amount of iced tea necessary to satisfy changes in demand.

14. More Practice –A new method to supply better memory chips for cell phones –Several new brands of cell phones are introduced, competing with Motorola –iPhones shown to cause cancer due to inflated amount of transmitting sound waves –Government raises tax on oil imports, gasoline –Great advertising campaign for Chipotle burritos –Hepatitis outbreak @ Chipotle, Panda Express –Chargers are 4-0 now, season tickets –Great ad campaign for Doritos, horrible droughts in Iowa (#1 corn farming state). Doritos

15. Homework 10/19,22 Read Ch 5.2 p. 120-130. –Complete Section Review # 1-3

16. What happens when both Supply and Demand Shift?

17. Double Shifts 1.S  > D  = P ? 2.D  > S  = P ? 3.D  > S  = P ? 4.S  > D  = P ? 5.D  = S  = P ? 6.D  = S  = P ? Draw a model for each of these to determine change in price.

18. Double Shifts 1.S  > D  = P  2.D  > S  = P  3.D  > S  = P  4.S  > D  = P  5.D  = S  = P constant 6.D  = S  = P constant

19. Homework Read pages 113-119. (yeah!! You already did!!) Complete #2-8 on page 119.

20. True or False? When quantity supplied is greater than quantity demanded, a surplus exists. A shortage occurs when quantity demanded is greater than quantity supplied. If price is too high, there is a surplus; if price is too low, there is a shortage. The supply of goods on hand is inventory. T T T T

21. Review (p.119) 1.If demand increases and supply is constant what happens to equilibrium price? 2.If supply decreases and demand is constant, what happens to equilibrium price? 3.If supply increases and demand is constant, what happens to price? 1.If the shortage is 40 units and the quantity supplied is 533 units, what is the quantity demanded? 40 + 533 = 573 2.If supply decreases by more than demand decreases, what happens to equilibrium price?

22. Graph the following: notice what happens to price A.Demand increases in a market B.Supply decreases in a market C.Demand decreases in a market D.Demand decreases by more than supply increases in a market

23. Suppose some actors from New York City come to perform a play on Saturday night. Tickets go on sale at 8am on Monday for $50.00 each. When the ticket office opens, there is a long line of people waiting to buy tickets. Those at the end will find the performance sold out. Was the $50 ticket price too high, too low or just right? Explain.

24. Students and Teachers A Jigsaw About Supply and Demand Applied Reference Chapter 5.2 p.120-130. Each group will be responsible for teaching their assigned section to the rest of the class.

25. Homework: Read and note parts of Chapter 5.2: –P. 129 “Trying Out for a HS Sport” –P. 130 “GPA, SAT Scores, and College” –P. 131 “Necessary Conditions…” Read and complete Question To Answer –P. 121 “How a Meeting in Vienna…” –P. 123 “ The California Gold Rush” –P. 127 “ How Might Highway Tolls…” Prepare for Unit 3 Quiz (Ch3-5) Next Class

26. Ch 5.2 Where Supply and Demand Show Up Read the chapter.Read the chapter. In groups of 4,In groups of 4, –Each person completes the Section Review#1-5 in spiral. –Read 3 Insets and discuss the answers. P. 121P. 121 P.123P.123 P. 127P. 127 –Select any three subsections and graphically represent supply and demand. Explain your representation. Do this on a separate paper and turn it in.