Download Quantity Demanded

Happy Block Day!
Get out the following items:
1. Whatever notes you have, except for the yellow
packets
2. A pen
3. A blank piece of binder paper
4. Two different color highlighters (markers will
work in a pinch)
HW reminder: by now, you should have filled out the google form. Around half
of you have not, which means you need to do so immediately after this class.
There will be two laptops set up in my room, and you should be able to do it on
your phone.
For Friday: print Unit 2 guided reading and note taking packet and bring to
class.
Read 5.3 pages 79-82
First off- Essential Understanding Quiz
You will have 25 minutes to answer the
following question
• In a market economy, how does the circular flow of the
economy address the problem of scarcity?
• Hints: what does scarcity force us to do?
• How does trade affect our economy?
• Use the terms factor markets, product markets, households and
businesses
Self assessment
• You are now going to mark your own response.
As you edit:
Highlight the areas in one color that address the proficient criteria.
Highlight the areas in another color that address the advanced criteria.
Scoring Rubric for EUQ #2
In a market economy, how does the circular flow of the economy address the problem of scarcity?
ADVANCED (in one color)
All of the Proficient criteria PLUS:
□ identifies the role of trade in addressing scarcity
PROFICIENT (in a different color)
□ demonstrates how scarcity forces choices
□ using the terms factor markets, product markets, households and businesses, explains the
allocation of resources in addressing scarcity
Use this example response to ensure you are scoring your response
accurately.
In a market economy how does the circular flow of the economy address scarcity?
Because our wants for goods and services are unlimited, but our resources for
producing those goods and services are limited, we need to use our scarce resources
efficiently. The circular flow of the economy addresses scarcity by constructing a very
effective system for allocating resources between households and businesses.
This allocation occurs through the interaction of individuals and firms in product and
factor markets. Through trade, households and businesses exchange what they have in
surplus (often gained through the efficiency of specialization) and trade for the
resources that they need. Combined together, these interactions determine what goods
and services will be produced, how, and for whom.
Finally,
Write the score you earned at the top of your paper
Demand PKT pg. 2 In-class
Demand: The willingness and ability for
consumers to purchase goods and services
at various price points in the market at a
given time consumers have to want to
and be able to buy the good or service
- It has to be both willingness and ability
otherwise it’s irrelevant, especially
when businesses use this as a tool.
- This represents “consumer spending”
in the CFE
• What does ability to buy something mean?
• Pull out your wallets and count the number of $$ you have
Gatorade Auction
This is a demand schedule.
Copy it into your notes. To
participate in the auction, you
Gatorade Auction
must
be both willing and able
to buy the Gatorade- that is,
you have to have the money
on hand.
SALE PRICE OF GATORADE
# OF STUDENTS WILLING TO BUY
Demand:
• Demand Curve: Graphic expression of demand – shows inverse relationship
between price and quantity demanded.
• PRICE is on the y axis
• QUANTITY DEMANDED is on the x axis
Use the Gatorade auction demand schedule to create a demand curve for Gatorade
Demanded for Bottle of Gatorade September 2013
Demanded
demand: (the Gatorade auction)
demand schedule: (the Gatorade prices and bids chart)
demand curve: (the demand schedule graphed)
Look over your two demand schedules- one
for Gatorade and one for M and M’s
• What do you think the relationship between price and quantity is?
• In other words, when price goes up, what happens to the quantity
demanded?
• When price goes down what happens to quantity demanded?
• Law of Demand: There is an inverse relationship between Price and
Quantity Demanded.
• If price goes up, then quantity demanded goes down.
• If price goes down, then quantity demanded goes up.
• This is change is called the price effect – a change in price will cause a change in quantity
demanded or supplied. *
1. What is this graph specifically telling us (think
quantity and demand)
P
HEADLINE – September 2, 2014
“Pepsi co, owner of Gatorade, announces that it
will double the price of its colorful sports drink at
stores nationwide”
$2.00
2. Based on the headline above, what is the first way
the market for Gatorade is going to change? Why?
50
Q
in thousands
Demand of Gatorade
3. What is the change in the market for Gatorade going
to look like on the graph?
Reminder: hang back if you haven’t filled out
the google form yet!
Warm up
9/5/14
Price
Quantity
Demande
d
$.25
14
$.75
13
$1.50
7
$2.50
5
$3.00
3
$5.00
1
New
Quantity
Demande
d
Here is our ___________
_________________ we made yesterday for
the Gatorade auction. For your warmup:
1. Fill in the blanks above (what is that table
to the left called?)
2. Graph the data. Remember, price on the
y axis, quantity demanded on the x axis
3. Consider if 10 really thirsty and really rich
kids were added to our class. Fill in the
new column to the left
4. Graph the new data
5. Answer the following: How are the two
demand curves different?
9/5/11 It’s Friiiiiiday. HW- be awesome.
Agenda
• Warm up
• Demand shifts!
• Mary’s tuna
Objectives
• distinguish between demand
shifts and demand changes
• Apply demand shifts and
changes to the scenario of Mary
and her grocery store
Demand Shifters/Determinants
1.
2.
PKT pg. 2
A shift in demand is an increase or a decrease in the quantity demanded at every price point in the
marketplace.
This is a change that occurs for reasons other than price. Therefore, the law of demand does not apply.
• This happens due to a change in one of the demand shifters/determinants.
• The price of the good or service has NOT changed.
• The whole demand curve shifts either to the left (decrease in demand) or to the right (increase in demand)
2. A demand shifter/determinant is something in the market that causes consumers to increase or decrease
their demand for a good or serve at all price points. The demand shifters/determinants are:
• Changes in income
• Number of consumers
• Tastes and preferences
• Consumer expectations anticipated change in price, ie an upcoming sale
• Change in the price of substitute goods
• Change in the price of complementary goods
What is a substitute?
• Examples:
•
•
•
•
burritos and tacos
Pullover sweatshirts v hoodies
Fish and chicken
Pepsi and Coca cola
• Based off these examples, come up with definition for a substitute
good, and think of your own example
Complementary good
• Examples
•
•
•
•
Hamburgers and buns
Printers and ink cartridges
Lamps and light bulbs
Soccer cleats and soccer balls
• Based off these examples, come up with definition for a
complementary good, and think of your own example
Change in Demand VS. Change in quantity demanded
Shift in demand occurs when
there is a change in one of the
demand determinants but there is
NO change in the price of the
good or service.
P
A change in quantity demanded
occurs ONLY when the price of the
good or service changes.
P
B
$8.00
A
$5.00
$5.00
C
$2.00
30
50
100
Q
50
100
Q
Mary runs the only grocery store in a 12 block area of San Jose. Many of her customers are elderly and don’t
have much income. Mary sells lots of canned tuna fish. It isn’t too expensive, and it is a good source of
protein. Mary charges $.79 cents a can all the time, but she has noticed that her sales have changed from
time to time. PKT pg. 4
1. When the price of hamburger meat
went up 20 cents a pound, Mary sold
about 50 more cans of tuna each day.
P
Explanation:
Q
Mary runs the only grocery store in a 12 block area of San Jose. Many of her customers are elderly and don’t
have much income. Mary sells lots of canned tuna fish. It isn’t too expensive, and it is a good source of
protein. Mary charges $.79 cents a can all the time, but she has noticed that her sales have changed from
time to time. PKT pg. 4
2. Mary’s customers receive their Social Security checks on the first of the
month. Mary sells about 100 more cans of tuna a day at the start of a
month than at the end of a month.
3. For a few weeks after there was an article in the newspaper about how
the high levels of mercury in tuna, Mary’s sales decreased by 30 cans a
day.
4. There was a news story suggesting that a truck driver’s strike might cause
food deliveries to be interrupted. Mary sold 100 cans more a day.
Warm
up
• Read the above headline.
• Then, draw a graph that shows how the demand curve will
change for Nike in the month of September.
• Then, explain your graph in 2-3 complete sentences
Listed below are the 6 things that cause a demand shift. They are the
demand shifters or demand determinants.
Identify which one of the 6 was at play in our warm up about Nike’s
half off month. In 2-3 complete sentences, explain why you chose the
shifter that you did
• Changes in income
• Number of consumers
• Tastes and preferences
• Consumer expectations
• Change in the price of substitute goods
• Change in the price of complementary goods
9/8/14- Happy Monday y’all!
• Agenda
• Warmup- shifts vs changes
Objectives- by the end of this period,
you will be able to…
• Graphically interpret and
distinguish between various
situations involving shifts in
demand v change in quantity
demanded
• Explain how consumer
expectations cause a shift in
demand
• Make predictions relating to
elasticity
Shift in demand VS. Change in quantity demanded
Shift in demand occurs when
there is a change in one of the
demand determinants but there is
NO change in the price of the
good or service.
P
A change in quantity demanded
occurs ONLY when the price of the
good or service changes.
P
B
$8.00
A
$5.00
$5.00
C
$2.00
30
50
100
Q
50
100
Q
DONE? CHECK THESE OUT…
1. Joe eats one can of Spam per week. Recently, Joe received a significant raise in his
income. Over the course of the following month, Joe purchased only one can of Spam.
Does this situation contradict the law of demand? Why or why not ?
2. When MP3 players became available, the sales of CDs dropped, and the sales of MP3
players soared. Explain why the decline in CD sales does not illustrate the price effect.
Is there a demand shifter at work in this example? Explain.
3. In order to increase purchases, a chain of grocery stores reduced its prices and tried to
change its image by making stores cleaner and more attractive and by adding lighter
foods to the deli menu. Explain how these efforts illustrate a change in quantity
demanded and one of the shifters of demand.
5. All of the major hotels on one of the Hawaiian Islands increased their rates in an
attempt to raise profits. Two months later, United Airlines reduced the number of
flights to Hawaii by twenty percent. Explain what happened in this situation.
Warm up- 9/9/14
• Write down a good or service you would buy even if the price
doubled.
• Then, write down a good or service you would buy even if the price
was 10 times more
• Last, write down a good or service you would buy if only the price
was halved
9/9/14- HW- nope
Agenda
• Predictions and scenarios
surrounding
• Defining and graphing demand
elasticity
• Formative assessment on
Demand
Objectives- by the end of this
class, you will be able to…
• Define and draw graphically
elasticity of demand
• Tell the difference between
elasticity and inelasticity
With your partner…
• Imagine you are the author of a
book who gets a royalty
payment of 10% from the sale of
the book. You get a phone call
from your publisher telling you
they are increasing the price of
your book from $25 to $30.
Should you be happy about this?
Why or why not?
• What assumptions are you
making about the change in
quantity demanded in your
answer?
Coupons…
• Two of the most common
products to offer coupons in the
newspaper are breakfast cereals
and household cleaners.
• Graph what coupons do
• Why do these companies offer
coupons?
• What are they assuming about
demand?
• Graph the change (a 2$
price increase in Netflix)
• Why would such a small
change in price send
Netflix customers
“running”?
• What happens to
quantity demanded?
“Even a $2 price hike in heart surgery could
send customers running”
• Graph the change ($2 increase in
the cost of heart surgery
• Why does the headline above
seems odd?
• What is different between
Netflix and heart surgery?
Demand Elasticity
Definition:
• a consumer’s sensitivity to change in price
• How much a quantity demanded changes in response to the change
in price
P
P
Product A
Product B
P2
P2


P1
P1
Q2

Q
Q1
Q2
 Q1
Q
• Compare the changes in quantity demanded for Product A
and Product B.
• Why is there a difference?
• Guess why some products might match the graph for A
and which products might match the graph for B
Demand Elasticity
P
P
Perfectly Elastic
Q
• A market that is perfectly elastic sells goods
where the overriding factor that motivates
consumers is price.
• It is a market that has many producers who
produce many substitutes (virtually identical
goods)
• The other demand determinants/shifters play
little to no role.
Perfectly Inelastic
Q
• A market that is perfectly inelastic sells goods
where the overriding factor that motivates
consumers is necessity.
• It is a market that has few producers who
produce a unique good that only a limited
number of consumers will purchase no matter
what the price.
• Is Netflix an elastic or
inelastic good?
• Redraw your graph of a $2
dollar price increase in
Netflix, paying attention to
the slope of your line
“Even a $2 price hike in heart surgery could
send customers running”
• Is heart surgery an elastic or
inelastic good?
• Redraw your graph of a $2 dollar
price increase in Heart Surgery,
paying attention to the slope of
your line
Elasticity of Demand
For each graph, match the item in the list provided and then explain why you matched that item to the
graph.
1.
2.
iPhones
Bags of Rice
3. Insulin
4. Gas stations
Elasticity of Demand
For each graph, match the item in the list provided and then explain why you matched that item to the graph.
1.
2.
iPhones
Bags of Rice
3. Insulin
4. Gas stations
Practice on the white boards:
• Create a fictitious scenario and graph for the following
• Increase in quantity demanded
• Decrease in quantity demanded
• Increase shift in demand
• Decrease shift in demand
Demand
Back to Back
• Sit with your partner back to back so you can’t see each
other.
• Follow the directions on your handout.
• REMEMBER you cannot say the term or describe what it
represents. You are describing the image.
C.F.A. – Demand
Get out a half sheet of paper and write your name, date and period.
Please define the following terms:
1. The Law of Demand
2. Change in quantity demanded (please draw a graph as well)
3. Change in demand (please draw a graph as well)
C.F.A. - Demand
Read the following questions and circle the answer you think is correct. Be prepared to explain your answer.
4. Other things being constant, which of the following would not cause a change in the demand (shift in the demand
curve) for mopeds?
a.
b.
c.
d.
A decrease in consumer incomes.
A decrease in the price of mopeds.
An increase in the price of bicycles.
An increase in people’s taste for mopeds.
5. “Rising oil prices have caused a sharp decrease in the demand for oil.” Speaking precisely and using terms as they are
defined by economists, choose the answer that best describes this statement:
a.
b.
c.
d.
The statement is correct – an increase in price always causes an decrease in demand.
The statement is incorrect – an increase in price always causes an increase in demand not a decrease.
The statement is incorrect – an increase in price causes a decrease in quantity demanded not a decrease in
demand
The statement is incorrect – an increase in price causes an increase in the quantity demanded not a decrease
in demand
C.F.A. - Demand
6. “As the price of domestic cars has inched upwards, customers have found foreign cars to be a better bargain.
Consequently, domestic car sales have been slipping and foreign car sales have been moving briskly.” Using only the
information in this statement and assuming everything else is constant, which of the following best describes this
statement? (You may want to graph the statements to help you identify the correct answer.)
a.
b.
c.
d.
A shift in the demand curves for both domestic and foreign cars.
A movement along the demand curves for both foreign and domestic cars.
A shift in the demand curve for domestic cars, a movement along the demand curve for foreign cars.
A movement along the demand curve for domestic cars and a shift in the demand curve for foreign cars.
After pg. 2 is done, check your understanding.
A
B
D
Change in Quantity Demanded on the
same demand curve (pt. a to pt. b)
Change in Demand at every price
point represented by two demand
curves and a change in the overall
market (i.e. income)
D1
P
31. What does graph X show?
A.
B.
C.
D.
●A
● B
An increase in the quantity demanded.
A decrease in the quantity demanded.
An increase in demand.
A decrease in demand.
Q
GRAPH X
P
42. What does graph Y show?
A.
B.
C.
D.
D2
D1
Q
GRAPH Y
An increase in the quantity demanded.
A decrease in the quantity demanded.
An increase in demand.
A decrease in demand.
Demand practice PKT pg. 6
1. Scientists Prove Milk Lengthens Life Span
• What effect does this have on demand for
milk?
5. The price of laundry detergent increases.
• What effect does this have on demand for
laundry detergent?
2. The price of coffee increases.
• What effect does this have on demand for
coffee
6. The season changes from spring to summer.
• What effect does this have on demand for
bathing suits?
3. The birth rate doubles.
• What effect does this have on demand for
food?
7. Mortgage Interest Rates Reach Record High
• What effect does this have on demand for
new homes?
4. Builder Completes New Subdivision Next to
Movie Theater
• What effect does this have on demand for
movie tickets?
8. The price of gasoline increases.
• What effect does this have on demand for
gas?