Download Prices, Supply and Demand Directions: Use 3

Prices, Supply and Demand
Directions: Use 3-5 minutes to double check this subject’s Power School for your class grade and work listings
verifying that all work is caught up. Read and heed embedded messages. Next, research your part of the
following topics and figure out answers to the questions. Write your questions and detailed answers on lined
paper or your notebook paper. These questions and related answers are required to be handed in, once the
class discussion is completed. You are expected to use the time completely, be through and become
knowledgeable. Write down any puzzles you have related to the material on your paper and bring them up
during the class discussion. Warning: If you are found to be using your research time for other things, it will
hurt your learning and grade. If you think or claim to be done, you are not! Once your assigned part is ready,
then help others on your team or study the test resources from Mr. Spitzer’s web page for the upcoming test. No
games, non-topic talk or other activities allowed during research time. The class will research as much as
time allows before team sharing and whole class discussion. Since there is always more to learn, Mr. Spitzer
encourages you to look into this topic more on your own time. Your class work grade includes: 1. Entire use of
time while researching. 2. Answer questions & pay attention during team sharing. 3. Paying attention &
participate during class discussion. 4. Turning in your readable questions & notes. Team members who do
not do their share, provide hasty sloppy answers, disrupt others and use time ineffectively in the four
grade aspects will be removed from the team and required to write out and turn in all answers on their
own for the grade.
Vocabulary to Define: (ALL)
1. Demand 2. Law of Demand 3. Substitution Effect 4. Income Effect 5. Elasticity
of Demand 6. Inelastic 7. Elastic 8. Supply 9. Law of Supply 10. Quantity
Supplied 11. Elasticity of Supply 12. Equilibrium 13. Disequilibrium 14. Excess
Demand 15. Shortage 16. Excess Supply 17. Surplus 18. Incentive 19. Price
Questions to be able to discuss
1. What are demand and the law of demand? Give an example of an item you
will buy more of when its price decreases and less of when its price
increases. Explain.
2. What is the substitution effect on demand when the price of an item
increases? Give an example of this in your household.
3. What is the Income Effect on demand? Give an example when your income
increases and another example for when your income decreases. What
happens when the number of buyers increases? Decreases?
4. What is the effect on demand when credit is easily available? Why?
5. Explain elasticity of demand in your own words using an example.
6. Name a good with elastic demand at its current price? Why?
7. Why is demand for home heating fuel inelastic in cold weather?
8. Consider a good, like gasoline, for which demand can become more elastic
over time. What changes can take place in the long term to affect demand?
9. Choose three goods. Then predict whether they have elastic or inelastic
demand at their current price. Survey four of your classmates and get their
views on these goods and report the results and reasoning to the class.
10. Explain the supply and the law of supply in your own words. What is the
difference between the two?
11. What is elasticity of supply? How does the quantity supplied of a good with
a large elasticity of supply react to price change?
12. If the price of oil rises around the world, what will happen to oil production
in Texas? Explain your answer. If the price of oil falls around the world to
levels below $30 a barrel what will happen to the oil production from shale
in Colorado?
13. Chose an example each of land, labor, physical capital, and human capital.
What happens to each of your examples when supply increases? Decreases?
What happens to each of your examples when demand increases?
Decreases?
14. What is unique about equilibrium price? How common is disequilibrium?
Give an example of each.
15. What situation can lead to excess demand? Give an example. What is
another term for excess demand? What situation can lead to excess
supply? Give an example. What is another term for excess supply?
16. How do incentives, both monetary and non-monetary, affect choices of
households demand for goods? Give an example of monetary incentive and
an example of non-monetary incentive.
17. How do incentives, both monetary and non-monetary, affect choices of how
businesses plan change demand for goods? Give a different example of
monetary incentive and a different example of non-monetary incentive,
from the previous question’s examples.
18. What is the role of prices in a free market? Give three reasons why a pricebased system works more efficiently than central planning.
19. Give two examples of situations in which prices gave you an incentive to
purchase or not purchase a good or service.
20. Suppose that a recent hurricane has caused a supply shock in the market for
sugar in the United States. How would you attempt to solve the problems
that follow the storm? What actions are available to both consumers and
producers?
After discussion conduct Bidding Activity – takes an entire class period, if not more