1. Bell Ringer!!! Tell me a story about a time you got a REALLY good deal on an item you bought.  What was the item, original price, circumstances of the price you paid, etc.?

2. In the Chips Simulation Debrief Take out a sheet of paper! Answer the following questions based on your experience during the simulation: 1. What was the goal of buyers? 2. What was the goal of sellers? 3. How was a transaction price determined? 4. From round one to round four, did the amount of time it took you to make a transaction increase or decrease?  Why do you think this is? 5. Explain which concepts from this game can be applied to a free market system.

3. Dwight Schrute says:  “Fact: the demand for Dunder-Mifflin paper is low. I think this is because people don’t make as many paper airplanes as they used to.”

4. Understanding Demand

5. What is Demand? The willingness and ability of buyers to purchase different quantities of a good at different prices during a specific time period

6. The Law of Demand As the price of a good increases, the quantity demanded of the good decreases, and as the price of a good decreases, the quantity demanded of the good increases  If P  then Q d   If P  then Q d   Where P = price and Q d = quantity demanded  BLACK FRIDAY!

7. Demand vs. Quantity Demanded Quantity demanded is the number of units of a good purchased at a specific price

8. Buying Makes Me Happy! Utility is the quantity of satisfaction or happiness you receive from a unit of good  The more utility you receive from a unit of a good, the higher price you are willing to pay for it;  The less utility you receive from a unit of a good, the lower price you are willing to pay for it.

9. Law of Diminishing Marginal Utility Who likes CIRCUS PEANUTS?!?!?! I mean, REALLY likes them…

10. Law of Diminishing Marginal Utility Experiment!  Student eats 1 st circus peanut and assigns # of utils (happiness) he/she gained  Student eats 2 nd circus peanut and assigns utils  Student eats 3 rd …4 th …87 th …etc.

11. Why do P and Q d Move in Opposite Directions? The law of diminishing marginal utility states that as a person consumes additional units of a good, eventually the utility gained from each additional unit of good decreases  The first piece of pizza is the best!  Or your first private jet? Thus, individuals will buy larger quantities of a good only at lower prices.  Girl eats her feelings (Investopedia video)  http://www.investopedia.com/video/play/law-of-diminishing-marginal-utility/ http://www.investopedia.com/video/play/law-of-diminishing-marginal-utility/

12. Law of Demand in Numbers The demand schedule is the numerical representation of the law of demand Price (in dollars)Quantity demanded (in units) $41 32 23 14

13. Law of Demand in Pictures The demand curve is the graphical representation of the law of demand  The standard practice in economics is to call the graphic representation of the relationship between price and quantity demanded a demand curve—whether it is a curve or straight line

14. Individual and Market Demand Curves An individual demand curve represents an individuals demand A market demand curve shows the sum of all the different individual demand curves added together