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SUPPLY, DEMAND, AND MARKET EQUILIBIRUM CONCEPT REVIEW Pages in Textbook for Activities used in class to practice Concepts Taught review concepts Demand 88-91 Law of Demand 91-93 Diminishing Marginal Utility and Demand Determinants for Changes in Demand Graphing Changes in Demand 93 95-99 Changes in Quantity demanded 95-96 Supply 113-114 Law of Supply 114 Determinants for Changes in Supply 116-118 Graphing Changes in Supply 116-118 Changes in Quantity Supplied 115-116 Market Graphs 142-145 Equilibrium Price 143-145 Equilibrium Quantity 143-145 Graphing and Reading Changes in Equilibrium Prices and Quantities Elasticity of Demand Elastic Demand 146-148 Inelastic Demand 102 Unit Elastic Demand 103 Total Revenue Test for Elasticity of Demand 103-107 96-98 101-103 102 Survey of Demand, Class Notes, Demand Powerpoint (on Moodle) Survey of Demand, Class Notes, Demand Powerpoint (on Moodle) Classnotes, DMU from last unit Is there a Price Change? Classnotes, Demand Powerpoint (on Moodle) Classnotes, Powerpoint (on Moodle), Demand Spot Check, Demand Exercises, Whiteboard Practice Classnotes, Powerpoint (on Moodle), Demand Spot Check, Demand Exercises, Whiteboard Practice Survey of Supply of Tutoring Hours, Classnotes, Supply Powerpoint (on Moodle) Survey of Supply of Tutoring Hours, Classnotes, Supply Powerpoint (on Moodle) Classnotes, Handout”Determinants of Supply”, Powerpoint (on Moodle), Supply Spot Check, Demand Exercises, Whiteboard Practice Classnotes, Powerpoint (on Moodle), Supply Spot Check, Supply Exercises, Whiteboard Practice Classnotes, Powerpoint (on Moodle), Supply Spot Check, Supply Exercises, Whiteboard Practice Market in Oil Game and Graphs, Classnotes, Market Pricing Steps, Whiteboard Practice Supply Exercises and Demand Exercises, Equilibrium Prices, Class Notes, Market Pricing Steps, Whiteboard Practice Supply Exercises and Demand Exercises, Equilibrium Prices, Class Notes, Market Pricing Steps, Whiteboard Practice Supply Exercises and Demand Exercises, Equilibrium Prices, Class Notes, Market Pricing Steps, Whiteboard Practice Classnotes and Elasticity of Demand Worksheet Classnotes and Elasticity of Demand Worksheets Classnotes and Elasticity of Demand Worksheets Classnotes and Elasticity of Demand Worksheets Classnotes and Elasticity of Demand Worksheets Economics Supply and Demand Review The test will be about Demand, Supply, Elasticity, Equilibrium, Shortages and Surpluses. Demand: A change in Quantity Demanded means that What is a change in Demand? (circle one) (circle one) Moving from one point on a demand curve to another point on the same curve Moving from one point on a demand curve to another point on the same curve OR OR Drawing a new demand curve Drawing a new demand curve Draw 2 graphs: one that shows an increase in Quantity Demanded AND one that shows a decrease in Quantity Demanded Draw 2 graphs: one that shows an increase in Demand AND a decrease in Demand What is the mnemonic (memory) device to help you remember the determinants of Demand? Complements If the price of a complement increases, what happens to the demand for the product being graphed? If the price of a complement decreases, what happens to the demand for the product being graphed? Substitutes Income If the price of a substitute increases, what happens to the demand for the product being graphed? If consumer income increases, what will happen to the demand for a product? If the price of a substitute decreases, what happens to the demand for the product being graphed? If consumer income decreases, what will happen to the demand for a product? An increase in taxes will ___________________ a person’s income A decrease in taxes will ___________________ a person’s income Attitudes, Trends, Number of Consumers Attitudes, Trends, Number of Consumers A change in the amount of buyers of a product would be Anything that makes the good more popular will __________________ the demand for the good New information about a product would be considered A good’s popularity with society would be considered Anything that makes the good less popular will ___________________ the demand for the good Supply What is a change in Quantity Supplied? What is a change in Supply? (circle one) (circle one) Moving from one point on a supply curve to another point on the same curve Moving from one point on a supply curve to another point on the same curve OR OR Drawing a new supply curve Drawing a new supply curve Draw 2 graphs: one that shows an increase in Quantity Supplied AND one that shows a decrease in Quantity Supplied Draw 2 graphs: one that shows an increase in Supply AND a decrease in Supply What is the mnemonic (memory) device to help you remember the determinants of Supply? Inputs If the price of an input increases and the input becomes more expensive, what impact will it have on the Supply of a good? If the price of an input decreases and the input becomes less expensive, what impact will it have on the Supply of a good? Technology Government Action A change in technology will always cause what type of change in Supply? What happens to the supply of a good if the government imposes a sales tax on that good? A tariff, an embargo, and trade sanctions will all cause what type of change in Supply? What will happen to the Supply of a good if the government removes a tariff, embargo or trade sanctions? Number of Sellers If manufacturers go bankrupt, go out of business or are merged together, what will happen to the Supply of the good they make? If more manufacturers begin to make the good, what will happen to the Supply of the good they make? If a natural disaster occurs, what will happen to the Supply of a good? What happens to the supply for cupcakes if the price of sugar falls? What happens to the supply of lawn care if the minimum wage is increased? Equilibrium: Where is the equilibrium point found on a graph? At the equilibrium point, what is true about the number of buyers (QD) compared to the number of sellers (QS)? Draw a graph for a market and label the equilibrium Price and equilibrium Quantity Draw a correctly labeled graph that shows an increase in Demand Draw a correctly labeled graph that shows a decrease in Demand What happens to the equilibrium Price? What happens to the equilibrium Price? What happens to the equilibrium Quantity? What happens to the equilibrium Quantity? (both curves are on a market graph) (both curves are on a market graph) Draw a correctly labeled market graph that shows an increase in Supply Draw a correctly labeled graph that shows a decrease in Supply What happens to the equilibrium Price? What happens to the equilibrium Price? What happens to the equilibrium Quantity? What happens to the equilibrium Quantity In the market for daycare: the number of children born in the US has steadily decreased since the year 2000 In the market for strawberries: there is a disease that is attacking the strawberry plants this growing season Does this headline impact the Supply or Demand for daycare? Does this headline impact the Supply or Demand for strawberries? Will it cause an increase or a decrease? Will it cause an increase or a decrease? What will happen to the Price and Quantity in the market? What will happen to the Price and Quantity in the market? In the market for cheese: the price of crackers decreases? In the market for pizza: the price of cheese increases? Does this headline impact the Supply or Demand for cheese? Does this headline impact the Supply or Demand for pizza? Will it cause an increase or a decrease? Will it cause an increase or a decrease? What will happen to the Price and Quantity in the market? What will happen to the Price and Quantity in the market? (both curves are on a market graph) (both curves are on a market graph) In the market for ipods: the government mails a $500 stimulus package check to every household in America? In the market for potato chips: two new chip companies begin producing chips? Does this headline impact the Supply or Demand for ipods? Does this headline impact the Supply or Demand for potato chips? Will it cause an increase or a decrease? Will it cause an increase or a decrease? What will happen to the Price and Quantity in the market? What will happen to the Price and Quantity in the market? In the market for apples: the surgeon general finds that eating them helps give a person better looking skin In the market for corn: a new machine is developed that greatly reduces the time needed to harvest crops Does this headline impact the Supply or Demand for apples? Does this headline impact the Supply or Demand for corn? Will it cause an increase or a decrease? Will it cause an increase or a decrease? What will happen to the Price and Quantity in the market? What will happen to the Price and Quantity in the market? In the market for cars: the US places a tariff on cars imported from Europe and Asia In the market for French fries: the price of onion rings drops Does this headline impact the Supply or Demand for cars? Does this headline impact the Supply or Demand for French fries? Will it cause an increase or a decrease? Will it cause an increase or a decrease? What will happen to the Price and Quantity in the market? What will happen to the Price and Quantity in the market? Shortages and Surpluses: In a surplus, circle the correct relationship between QS and QD In a shortage, circle the correct relationship between QS and QD QS = QD QS > QD QD > QS QS = QD QS > QD QD > QS Draw a graph that shows a surplus. You must label the QD and the QS Draw a graph that shows a shortage. You must label the QD and the QS If there is a surplus in a market: If there is a shortage in the market: Is the price higher or lower than the equilibrium price? Is the price higher or lower than the equilibrium price? What direction will the price move to reach the equilibrium? What direction will the price move to reach the equilibrium? Price Ceilings and Price Floors A Price Ceiling causes a permanent A Price Floor causes a permanent _____________________ ________________________ Draw a graph that shows a price ceiling. You must label the QD and the QS Draw a graph that shows a price floor. You must label the QD and the QS If there is a price ceiling in a market: If there is a price floor in the market: Is the price higher or lower than the equilibrium price? Is the price higher or lower than the equilibrium price? Is the price ceiling intended to help the buyers or the sellers? Is the price floor intended to help the buyers or the sellers? Elasticity Elasticity is the sensitivity of a good’s demand to a change in price In a situation with Elastic demand, which will be the bigger movement? Explain this in other words: The change in Price or The change in Quantity Inelastic demand Elastic demand When the Price of a good changes, _________ people change their minds about buying the good When the Price of a good changes, _________ people change their minds about buying the good Compared to a normal demand curve, an inelastic demand curve is what shape? Compared to a normal demand curve, an elastic demand curve is what shape? Draw a graph with an inelastic demand curve. Show the price increasing, as well as the change in quantity Draw a graph with an elastic demand curve. Show the price increasing, as well as the change in quantity In a situation with Inelastic demand, which will be the bigger movement? What is the formula for Total Revenue? The change in Price or The change in Quantity When using the Total Revenue Test, what directions do Price and Total revenue move when demand is elastic? When using the Total Revenue Test, what direction do Price and Total revenue move when demand is inelastic? Use the Total Revenue Test to determine whether the good has Elastic or Inelastic demand: Use the Total Revenue Test to determine whether the good has Elastic or Inelastic demand: P Q Old 11 6 New 10 7 TR P Q Old 5 10 New 8 8 Direction Price moves: ↑ ↓ Direction Price moves: ↑ Direction TR moves: ↑ Direction TR moves: ↑ Demand for this good is: ↓ Demand for this good is: ↓ ↓ TR Fill in the flow chart for finding Market Equilibrium: Equilibrium Flow Chart Remember that you will always shift ONE curve YES NO Figure out the relationship between the Figure out if the information in the headline will change the _________________________buy Use them together? the good OR change the __________________ _____________________ there are for sale shift the _____________ curve Use them in place of each other? ___________________ Number of buyers changes? shift the _____________ curve shift the ______________ curve I______________ Use one to make the other? A___________________________ _______________________ shift the ______________ curve Number of goods for sale changes? shift the ______________ curve T______________________ N______________________ G_______________________
