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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