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Economics with Mrs. Duez
Chapters 4, 5 and 6 — Supply and Demand
Main Ideas: **Demand is the desire, ability and willingness to BUY a product.
**There are a number of determinants that will increase or decrease demand and supply.
**Consumers react differently to price changes depending on whether the good is a necessity or a luxury.
**Supply is the desire, ability and willingness to SELL a product.
**For almost any good or service, the higher the price, the larger the quantity that will be offered for sale.
**Profit is maximized when the marginal costs of production equals the marginal revenue from sales.
**Changes in supply and demand cause prices to change.
**To achieve one or more of its social goals, government sometimes sets prices.
Learning Target Statements--Objectives

Chapter 4
Section 1
Chapter 4
Section 2
Chapter 4
Section 3
Chapter 5
Section 1
I can describe and illustrate the concept of demand.
demand
demand schedule
law of demand
demand curve

I can explain how utility and demand are related.
marginal utility
diminishing marginal utility

I can explain what causes a change in quantity demanded.
price change only

I can describe the determinants that cause a change in demand.
consumer taste
income
price of related goods
substitutes
complements
expectations
number of buyers

I can explain why elasticity is a measure of responsiveness.
elasticity
demand elasticity

I can analyze the elasticity of demand for a product.
elastic
inelastic
total expenditures test
unit

I can understand the factors that determine demand elasticity.
Can the purchase be delayed?
Are adequate substitutes available?
Does the purchase use a large portion of income?

I can describe and illustrate the concept of supply.
supply
supply schedule
law of supply
supply curve

I can explain what causes a change in quantity supplied.
price change only

I can describe the determinants that causes a change in supply.
resource price
technology
taxes and/or subsidies
number of sellers
expectations
prices of related goods
Chapter 5
Section 3
Chapter 6
Section 2
Chapter 6
Section 3
Product Targets
NOT EXTRA
CREDIT

I can define the key measures of cost.
fixed cost
variable cost
total cost

I can identify two key measures of revenue.
total revenue
marginal revenue

I can understand how prices are determined in competitive markets.
economic model
market equilibrium
equilibrium price

I can explain how economic models can be used to predict and explain price changes.
surplus
shortage

I can describe the consequence of having a fixed price in a market.
price ceiling
price floor
Demand Graphs
Supply Graphs
Supply and Demand Graphs