1. TOK Economics Lesson #5 SupplyandDemand

2. Review What is the fundamental problem of economics? What are the 3 basic economic questions? How does the U.S. answer those?

3. Video time! DVD Ch. 3: Onward and Upward – Introducing supply and demand in Amish country

4. Supply Definition – How much businesses are willing and able to sell of a particular good or service at various price Law of supply: The higher the price, the more businesses will supply, ceteris paribus Good – something tangible; a thing (e.g. hamburger, iPhone) Service – intangible, something done for you (e.g. haircut, bus driving)

5. Determinants of supply # of sellers Cost of production Profit possibilities elsewhere Technology Expectations

6. Another S + D video from farm country Get Down – more S+D and graphing

7. Demand Definition: How much people are willing and able to buy of a particular good or service at various prices Law of demand: The lower the price, the more people will buy, ceteris paribus

8. Determinants of demand # of buyers Income Tastes Other goods (substitutes + complementary goods) Expectations

9. Let’s try it: T-shirt activity Divide class into artists (sellers) and buyers; groups of 3-4 each 5 minutes to create a t-shirt (artists)/ $25 cash (buyers) 2 minutes to record how many shirts would be bought at prices from $5-$15; unspent money can buy other shirts afterwards Buyers pick 3 cards; sellers record new data after each card Plot demand curve using original data and another demand curve with data from 1 st card

10. Market participants: 4 groups Consumers – you and me! Government – federal, state & local Businesses – from mom & pop to Walmart Foreigners – they buy from us/sell to us Together, they create the Demand for things

11. It’s movie day! Predictably Irrational - http://www.youtube.com/watch?v=FaO3 aGmuNFc http://www.youtube.com/watch?v=FaO3 aGmuNFc What is the role of emotion and creativity in economics? What are the implications of economics being based, ultimately, on human psychology?