1. Review 1.Explain the Law of Demand 2.Explain the Law of Supply 3.Identify the 5 shifters of demand 4.Identify the 6 shifters of supply 5.Define Subsidy 6.Explain why price DOESN’T shift the curve 7.Define Equilibrium 8.Define Shortage 9.Define Surplus 10.Identify 10 stores in the mall 1

2. Unit 2: Supply & Demand Together!!! 2

3. Price Quantity Price Quantity Market Equilibrium = Q.D. = Q.S. Price Quantity S S D D S S D D 23 15

4. Price Quantity Price Quantity Shortage Surplus Demand > Supply Supply > Demand S S D D S S D D

5. Price Quantity Price Quantity Effective Non-Effective Price Ceiling P.C.

6. Non-Effective Effective Price Floor Price Quantity Price Quantity P.F.

7. 7 Video: The Hudsucker Proxy – Hula- hoop 1. Graph the supply and demand curve 2. Identify the shifter

8. Supply & Demand Headlines Worksheet Price Quantity Price Quantity Price Quantity Video: The Hudsucker Proxy – Hulahoop

9. Price Quantity S D Chocolate Milk is proven to cure cancer; however, half of the population of cows die from mad cow disease. How does this information affect the price and quantity of chocolate milk?

10. Pho is proven to increase the rates of heart attacks, and three new Pho restaurants open in the area. How would this information affect the price and quantity of Pho? Price Quantity S D

11. Price Quantity S D The price of chips increases, and 3 factories that produce salsa blew up at the same time. How would this information affect the price and quantity of salsa?

12. Chicken farms invented faster method to raise chickens; more than half million Chinese immigrate to the city. How does this information affect the price and quantity of orange chicken? Price Quantity S D

13. Use a S&D to explain this double shift 13

14. Pearl Exchange Activity 14

15. Voluntary Exchange Activity 15

16. S P Q D Consumer and Producer’s Surplus $10 8 6 $5 4 2 1 10 2 4 6 8 CS PS 16 Calculate the area of: 1.Consumer Surplus 2.Producer Surplus 3.Total Surplus 1.CS= $25 2.PS= $20 3.Total= $45

17. Q o $5 4 3 2 1 P Demand Schedule 10 20 30 40 50 60 70 80 17 PQd $510 $420 $330 $250 $180 D S Supply Schedule PQs $550 $440 $330 $220 $110 Supply and Demand are put together to determine equilibrium price and equilibrium quantity

18. Q o $5 4 3 2 1 P Demand Schedule 10 20 30 40 50 60 70 80 18 PQd $510 $420 $330 $250 $180 Supply Schedule PQs $550 $440 $330 $220 $110 Supply and Demand are put together to determine equilibrium price and equilibrium quantity Equilibrium Price = $3 (Qd=Qs) Equilibrium Quantity is 30 D S

19. Q o $5 4 3 2 1 P Demand Schedule 10 20 30 40 50 60 70 80 19 PQd $510 $420 $330 $250 $180 Supply Schedule PQs $550 $440 $330 $220 $110 Supply and Demand are put together to determine equilibrium price and equilibrium quantity D S What if the price increases to $4?

20. Q o $5 4 3 2 1 P Demand Schedule 10 20 30 40 50 60 70 80 20 PQd $510 $420 $330 $250 $180 Supply Schedule PQs $550 $440 $330 $220 $110 D S At $4, there is disequilibrium. The quantity demanded is less than quantity supplied. Surplus (Qd<Qs) How much is the surplus at $4? Answer: 20

21. Q o $5 4 3 2 1 P Demand Schedule 10 20 30 40 50 60 70 80 21 PQd $510 $420 $330 $250 $180 Supply Schedule PQs $550 $440 $330 $220 $110 D S How much is the surplus if the price is $5? Answer: 40 What if the price decreases to $2?

22. Q o $5 4 3 2 1 P Demand Schedule 10 20 30 40 50 60 70 80 22 PQd $510 $420 $330 $250 $180 Supply Schedule PQs $550 $440 $330 $220 $110 D S At $2, there is disequilibrium. The quantity demanded is greater than quantity supplied. Shortage (Qd>Qs) How much is the shortage at $2? Answer: 30

23. Q o $5 4 3 2 1 P Demand Schedule 10 20 30 40 50 60 70 80 23 PQd $510 $420 $330 $250 $180 Supply Schedule PQs $550 $440 $330 $220 $110 D S Answer: 70 How much is the shortage if the price is $1?

24. Q o $5 4 3 2 1 P Demand Schedule 10 20 30 40 50 60 70 80 24 PQd $510 $420 $330 $250 $180 Supply Schedule PQs $550 $440 $330 $220 $110 D S When there is a surplus, producers lower prices The FREE MARKET system automatically pushes the price toward equilibrium. When there is a shortage, producers raise prices