1. Add this to your notes or homework for Demand Ch 3.1/3.2 Make a list of 5 items you purchase each month. Make a list of 5 items you purchase each month. Next to each item, put its price and the quantity you purchase.Next to each item, put its price and the quantity you purchase. Which items would you buy more of if the prices were lower?Which items would you buy more of if the prices were lower? Which items would you buy less of if the prices were higher?Which items would you buy less of if the prices were higher? For which items are there substitutes?For which items are there substitutes? Do any of your purchases have a complement?Do any of your purchases have a complement?

2. Of Demand

3. Elasticity of Demand The relationship between the percentage change in quantity demanded and the percentage change in price. The relationship between the percentage change in quantity demanded and the percentage change in price.

4. Elastic Demand % change in Qd > % change in P % change in Qd > % change in P Price goes up 10% Quantity Demanded goes down 20%

5. Inelastic Demand % change in Qd < % change in price % change in Qd < % change in price Prices goes up 10% Quantity demanded goes down 5%

6. Unit Elastic Demand % change in Qd = % change in P % change in Qd = % change in P Price goes up 10% Demand goes down 10%

7. Factors that Determine Elasticity Goods May Be More Elastic When: Number of Substitutes Number of Substitutes Luxuries v. Necessities Luxuries v. Necessities % of Income Spent On the Good % of Income Spent On the Good Time Time

8. Complete Ch3 Demand H/O

9. In the first week, Jane sold 100 bracelets for $2.00 each. What was her total revenue? $200.00 The second week, she raised the price of bracelets to $2.20 To determine elasticity: To determine elasticity: What is the difference in price between week 1 and week 2? What is the difference in price between week 1 and week 2? What is the percentage change? (Difference ÷ Original) What is the percentage change? (Difference ÷ Original) She then sold 75. She then sold 75. What is the difference in quantity demanded (sold) between wk 1 and wk 2? What is the difference in quantity demanded (sold) between wk 1 and wk 2? What is the percentage change? (Difference ÷ Original) What is the percentage change? (Difference ÷ Original) % change quantity demanded (balls sold) ÷ % change price % change quantity demanded (balls sold) ÷ % change price Is the answer greater than 1, less than 1, or equal to 1?Is the answer greater than 1, less than 1, or equal to 1? Is demand elastic inelastic unit-elastic ? Is demand elastic inelastic unit-elastic ? What was his total revenue in the second week? What was his total revenue in the second week? Did his revenue increase or decrease in week 2 ? Did his revenue increase or decrease in week 2 ? If demand is ________, when price increases, revenue _____

10. So what? Elasticity of Demand Affects Elasticity of Demand Affects TOTAL REVENUE TOTAL REVENUE ( SOMETHING BUSINESSES CARE VERY MUCH ABOUT )

11. For your scenario, determine if demand is elastic, inelastic or unit-elastic. Also determine change in revenue. In the first week, Javier sold 100 basketballs for $20.00 each. What was his total revenue? #1 The second week, he raised the price of basketballs to $22.00. What was % change? He then sold 75 bbls? % change? Elasticity? Elasticity? Total Revenue, week 2? Change in revenue? #2 The second week, he lowers price to $18.00. He then sold 150. Elasticity? Elasticity? Total Revenue, week 2? Change in revenue? #3 The second week, he raises price to #22.00. He then sold 95. Elasticity? Total revenue, week 2? Change in revenue? #4 The second week, he lowers price to $18.00. He then sells 105. Elasticity? Total revenue, week 2? Change in revenue?

12. Homework Read p.80-84 Read p.80-84 Section Review p. 84 # 2-6 Section Review p. 84 # 2-6 Read p. 85-Developing Economic Skills: Read p. 85-Developing Economic Skills: “Thinking the Ceteris Paribus Way; or, It’s Never Too Late To Learn Some Latin” “Thinking the Ceteris Paribus Way; or, It’s Never Too Late To Learn Some Latin” Write a short answer to the Question to Answer

13. In your groups discuss the following and prepare to report the group consensus: Our national government has decided to commit to a campaign to reduce smoking. To achieve this goal, a proposed tax of $3.00 will be added to each pack of cigarettes. Our national government has decided to commit to a campaign to reduce smoking. To achieve this goal, a proposed tax of $3.00 will be added to each pack of cigarettes. Do you think cigarettes are elastic, inelastic or unit elastic?Do you think cigarettes are elastic, inelastic or unit elastic? Based on your decision in #1, will a $3.00 tax reduce the number of smokers in our society by more than the price increase?Based on your decision in #1, will a $3.00 tax reduce the number of smokers in our society by more than the price increase? Would you support or oppose this proposal? Do you have other alternatives?Would you support or oppose this proposal? Do you have other alternatives?