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WARM UP- 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. iPhones 2. Bags of Rice 3. The electricity bill 4. Gas stations 9/10/14 Agenda • Warm up on elasticity of demand • Formative assessment on Demand • Class Constitution Objectives, by the end of this class you should be able to • Demonstrate your understanding of Demand shifts versus change in quantity demanded • Identify and describe class rights C.F.A. – Demand Get out a half sheet of paper and write your name, date and period. Remember if you really do not know then write “IDK” or if you are guessing write “guess” next to your response. 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 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. 5. 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. “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. C.F.A. – Demand Please define the following terms: 1. The Law of Demand • The inverse relationship between price and quantity demanded. • As price goes up, quantity demanded goes down and vice versa. 2. Change in quantity demanded (please draw a graph as well) It is a change in the specific quantity of a good that buyers are willing and able to buy. The change is caused by a change in the price. 3. Change in demand (please draw a graph as well) It is an increase or a decrease in the quantity demanded at every price point in the marketplace because of a one of the demand shifters/determinants. C.F.A. – Demand 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. 5. 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. “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. Warm up part 2 • What is a constitution? • What are rights? What are some examples of rights you have in America? • the basic principles and laws of a nation, state, or social group (ie, this classroom) that guarantee certain rights to the people in it • Just as there are fundamental laws and rights in America, so there are fundamental laws and rights in this classroom. Fundamental Rights • The fundamental rights of this classroom are going to be listed on the next slide • These rights are broad ideas and need clarification. Your job is to decide what these rights look like, and what natural consequences are appropriate for a violation of a fundamental right. • If you notice that there is something missing form these fundamental rights, feel free to propose an additional right The fundamental rights of this classroom • Right to be safe • Right to be treated with respect • Right to hear and be heard • Right to receive help, obligation to give it • Right to learn • Teacher has the right to make executive decisions What does this right look like? What are some natural consequences if this right is violated?/ What would make it right? Warmup • What do you think could be a connection between these three images/ events? 9/12/14- SCC update Agenda • Warm up- 9/11 • Class constitution • Supply! Objectives- by the end of this class you should be able to • Predict the influence of 9/11 on current events • Identify and describe class rights • Explain the relationship between quantity supplied and price Hourly Pay Student 1 Hours willing to work for one week Student 2 Student 3 Student 4 $1.00 $5.00 $7.00 $10.00 $15.00 $20.00 $25.00 $100.00 • What pattern do you see in the responses? • Did anyone choose not to supply labor at any wage rate? Why? • What influences your decision to work nor not to work? • Why does a higher wage usually increase the number of hours people are willing to work? • Would you predict that a different group of people would fill out this out differently? Total • How does price affect how you act • Small decisions? Big decisions? 9/14/14 SCC→ assignments are posted, head’s up for Friday due date EUQ on demand tomorrow: Agenda • How much would you work a week? • The law of supply • Change in supply Objectives: by the end of class, you should be able to... • Explain the relationship between price and supply and name the law of supply • Identify the differences between a change in quantity supplied and a change/ shift in supply Unit 2.1 Demand EUQ response Get out a sheet of paper. Write your name, date, class period and 2.1 Demand EUQ at the top. On your paper draw and write in the model below and then respond to the question. 1. Take any product and graph a demand curve for the product. 2. Graph and explain demand elasticity. Explain and graph changes in quantity demanded. Separately explain and graph changes in demand with specific reference to a demand shifter. Explanation: Explanation: Elastic Demand Explanation: Explanation with reference to demand shifter: Inelastic Demand Hourly Pay Hours willing to work for one week Student 1 Student 2 $1.00 $5.00 $7.00 $10.00 $15.00 $20.00 $25.00 $100.00 • What pattern do you see in the responses? • What influences your decision to work nor not to work? • Why does a higher wage usually increase the number of hours people are willing to work? • Would you predict that a different group of people would fill out this out differently? Total Supply Supply: The willingness and ability of producers to supply goods and services at various price points in the market at a given time. - What to produce? and Who to produce for? (BEQs) is answered by producers response to consumer demand. - How to produce? The Factors of Production are central to ability and willingness, both their availability and their cost. - - ex. Car makers have been looking to produce hydrogen fuel cell cars but until this past year it cost close to $1 million per vehicle vs. about $30,000 for a Toyota Prius Profit Motive is the driving force for producers! This represents “Business to Product Market” quadrant in the CFE Supply: • Supply curve: Graphic expression of supply – shows direct relationship between price and quantity supplied. • PRICE is on the y axis • QUANTITY SUPPLIED is on the x axis • Law of Supply: There is a direct relationship between Price and Quantity Supplied. • If price goes up, then quantity supplied goes up. • If price goes down, then quantity supplied goes down. • This is change is called the price effect – a change in price will cause a change in quantity supplied. • Producers will generally respond to the changes in demand as much as they can. They do not want to produce too little or too much. P 1. What is this graph specifically telling us? 2. The sale price of bottled water goes up by $1. Graph this change. 3. What is the change in the market for bottled water going to look like on the graph? $2.00 500 Q in thousands Supply of Bottled Water P 1. What is this graph specifically telling us? HEADLINE – September 15, 2013 “Earthquake in China leads to widespread destruction of major plastics producing factories.” $2.00 2. Based on the headline above, what is the first way the market for bottled water is going to change? Why? 3. What has NOT changed in the market for bottled water? (at least not yet) 500 Q in thousands Supply of Bottled Water 4. What is the change in the market for bottled water going to look like on the graph? 5. The sale price of bottled water goes up by $1. Graph this change. 9/16/14 EUQ cancelled Agenda • Warm up- motivations • Review of law of supply • Supply determinants/ supply shifters Objectives- by the end of this class you should be able to • Explain the relationship between price and supply and name the law of supply • Identify the differences between a change in quantity supplied and a change/ shift in supply P 1. What is this graph specifically telling us? 2. The sale price of bottled water goes up by $1. Graph this change. $2.00 500 Q in thousands 3. What is the change in the market for bottled water going to look like on the graph? Supply of Bottled Water Warm up Period 1 Warm up • When learning about Demand, we have mostly been considering the perspective of the consumer, or the buyer. What do you think the main motivation of the consumer is? • When learning about Supply, we are considering the perspective of the producer, or the seller. What do you think the main motivation of the producer is? Change in Supply and Supply Shifters/Determinants 1. PKT pg. 2-3 A change in supply is an increase or a decrease in the quantity supplied at every price point in the marketplace. • The price of the good or service has NOT changed. Therefore, the law of supply does not apply. • This happens due to a change in one of the supply shifters/determinants • The whole supply curve shifts either to the left (decrease in supply) or to the right (increase in supply) 2. A supply shifter/determinant is something in the market that causes producers to increase or decrease their production of a good or serve at all price points. The supply shifters/determinants are: • Changes in costs of factors of production • Number of producers in the marketplace more producers= increase in supply • Technology • Producer expectation of future price • Government policy – taxes, regulations and subsidies • Productivity • Natural disaster or international events Law of Supply reminder • As the price of a firm's product increases, it becomes more attractive to produce that product and firms will want to supply more. • Why? What causes this? P 500 Q 2. The supply shifters/determinants are: • Changes in costs factors of production • Number of producers in the marketplace • Technology • Producer expectation of future price • Government policy – taxes, regulations and subsidies • Productivity • Natural disaster or international events • For each image, turn to a partner and decide whether it would look like graph A or graph B A B Supply – with markers! 1. War in the Middle East Causes Oil Prices to Skyrocket 5. Typhoon Hits Alaska – Extensive Damage to Fishing Vessels • What effect does this have on the supply of gasoline? • What effect does this have on the supply of fish? 2. Engineer Invents Faster Way to Make Computer Chips • What effect does this have on the supply of computer chips? 3. New Book Store Opens in Shopping Mall 6. House Prices More Expensive for Second Year in a Row • What effect does this have on the supply of houses? 7. Price of Cotton Falls • What effect does this have on the supply of books? • What effect does this have on the supply of tshirts? 4. Damage to Panama Canal Will Slow Coffee Imports Next Month 8. Government Announces Tax Breaks on Production of Fuel Efficient Cars • What effect does this have on the supply of coffee now? • What effect does this have on the supply of fuel efficient cars? Reasons for Changes in Supply PKT pg. 5 1. Auto Workers’ Union Agrees to Wage and Benefits Cuts 5. Cost of Steel Rises 6. Auto Producer Goes Bankrupt, Closes Operation 2. New Robot Technology Increases Efficiency 7. Buyers Reject New Models 3. Nationwide Auto Worker’s Strike Began at Midnight 4. National Government Significantly Reduces Subsidies on Fuel Efficient Cars Unit 2.1 Demand EUQ response Get out a sheet of paper. Write your name, date, class period and 2.1 Demand EUQ at the top. On your paper draw and write in the model below and then respond to the question. 1. Take any product and graph a demand curve for the product. 2. Graph and explain demand elasticity. Explain and graph changes in quantity demanded. Separately explain and graph changes in demand with specific reference to a demand shifter. Explanation: Explanation: Elastic Demand Explanation: Explanation with reference to demand shifter: Inelastic Demand Modified Demand EUQ • Graph and explain demand elasticity and demand inelasticity. • You should: • Have two graphs • Explain what elastic and inelastic mean Explanation: Elastic Demand Explanation: Inelastic Demand Unit 2.1 Demand EUQ Scoring Guide - Swap your response with a partner and write P.R. of “your partner’s name” by “your name” at the top. - Using your packet, textbook or other resources to check your partner’s responses for accuracy give them a score based on the scoring guide provided. Proficient Graph of elasticity looked similar to these Graphs were labeled P and Q (price and quantity demanded) Identified elastic goods as wants, and inelastic goods as needs Mentions that Elastic goods are more sensitive to price, while inelastic goods are less sensitive to price Advanced: explained demand elasticity with reference to availability of substitutes Elastic Demand Inelastic Demand P P Q Q Teacher Desk White Board Sherpa, Punu MartinezCoronado, Jeffrey Gurumurthy, Wilson, Binh Greesan Chan, Jennifer Osborne, Walter, Jamie Steven Doeden, Noah Galicia, Gerardo Hsu, Herbert Chu, Isabella Tang, Kevin Burns, Jillian Henriqu Ge, Stella ez, Angel Malo, Alexandra Hahn, Gordon Paulsen, Alexander ZaragozaChavez, Alexandra VargasPerez, Melissa Gruspe, Megan Huang, Tiffany Chan, Wilken, Matthew Charles Young, Hope Michaels, Rachel Kauffman, Weyers, Karen Grant Haggart, Alex Lamm, Nicholas Comstock, William Atkinson , Jenna 9/17/14 Turn in your signed CIS EC Agenda • Formative Assessment: demand elasticity and supply • Big Boxes of Bannanas Objectives C.F.A. – Supply and Demand Elasticity Get out a half sheet of paper and write your name, date and period. Remember if you really do not know then write “IDK” or if you are guessing write “guess” next to your response. Please define the following terms: 1. The Law of Supply 2. Change in quantity supplied (please draw a graph as well) 3. Change in supply (please draw a graph as well) C.F.A. 4. Other things being constant, which of the following would not cause a change in the long run supply (shift in the supply curve) of beef? A. B. C. D. 5. A decrease in price of beef. A decrease in the price of cattle feed [food for cows to eat]. An increase in the price of cattle feed. An increase in the cost of transporting cattle to market. The degree to which the quantity demanded responds to price is called A.a demand schedule. B.a demand shifter. C.elasticity. D.profit. C.F.A. 6. Although MVHS Prom bids (tickets) increased by $40 compared to the previous year, the same number of bids were sold. This means that: A.The demand for bids was elastic. B.The demand for bids was inelastic. C.The supply for bids was inelastic. D.The supply for bids was elastic. C.F.A. - Supply and Demand Elasticity Score your own responses, please be accurate in your self-assessment P Please define the following terms: 1. The Law of Supply B • The direct relationship between price and quantity supplied. • As price goes up, quantity supplied goes up and vice versa. A 2. Change in quantity supplied (please draw a graph as well) It is a change in the specific quantity of a good that producers are willing and able to supply or produce. The change is caused by a change in the price. Q P 3. Change in supply (please draw a graph as well) It is an increase or a decrease in the quantity supplied at every price point in the marketplace because of a one of the supply shifters/determinants. Q C.F.A. Read the following questions and choose the answer you think is correct. 4. Other things being constant, which of the following would not cause a change in the long run supply (shift in the supply curve) of beef? A. B. C. D. 5. A decrease in price of beef. A decrease in the price of cattle feed [food for cows to eat]. An increase in the price of cattle feed. An increase in the cost of transporting cattle to market. “Falling oil prices have caused a sharp decrease in the supply of 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 – a decrease in price always causes a decrease in supply. The statement is incorrect – a decrease in price always causes an increase in supply not a decrease in supply. The statement is incorrect – a decrease in price causes a increase in ‘quantity supplied’ not a decrease in supply The statement is incorrect – a decrease in price causes a decrease in the ‘quantity supplied’ not a decrease in supply C.F.A. Read the following questions and choose the answer you think is correct. 6. The degree to which the quantity demanded responds to price is called A. a demand schedule. B. a demand shifter. C. elasticity. D. profit. 7. Although MVHS Prom bids (tickets) increased by $40 compared to the previous year, the same number of bids were sold. This means that: A. The demand for bids was elastic. B. The demand for bids was inelastic. C. The supply for bids was inelastic. D. The supply for bids was elastic. Big Boxes of Bananas! • There will be 5 rounds of 5 minutes each. • During each round your goal is to maximize your buying or selling of big boxes of bananas. • BUYERS you are looking to buy at the lowest price possible so the price on your card will determine loss or gain. – look at what your card instructs you to do • SELLERS you are looking to sell at the highest price possible so the price on your card will determine profit or loss. – look at what your card instructs you to do • Each transaction can only use 1 card and it must be in whole $ amounts of 5s or 10s. After each transaction you will record the ACTUAL SALE price you agreed upon on your individual score sheet. • After you have two cards in your hand that are the opposite come up to the front and get new ones. • SELLERS only – tell me your transaction prices when you come to get new cards. • You may NOT engage in any transactions before or after the market is closed. • You may NOT get together as a group and negotiate it must all be individual transactions. Buyers Sale Budget Minus Actual Sale Price Equals Net Gain or Loss (amount stated on buyer card) 1 60 - 40 = 20 2 60 - 80 = -20 Equals Net Gain or Loss Sellers Actual Sale Sale Price Minus Production Cost (amount stated on seller card) 1 40 - 60 = -20 2 80 - 60 = 20 IN THE NEWS: Economy in recession. Consumers income goes down. IN THE NEWS: A drought has wiped out 50% of the banana crop! Government releases a study that shows eating 3 bananas day improves your memory by 65%. Economy has recovered. Consumer spending on the rise. Draft Lesson Plans? Turn them in to your period’s box Last reminder on SCC Agenda Objectives • Explain what creates price • Define Market equilibrium, market clearing price, demand equilibrium, supply equilibrium, surplus, and shortage • Practice graphing supply and demand Warm up: - What part of the Circular flow did we reenact with the Big Boxes of Bananas activity? Explain. - Where does price matter most in the circular flow of the economy? Price • The value in $$$ of a product • Is determined by the interaction of supply and demand • High/low prices = incentives for producers and consumers to enter market • Most effective way to answer the Basic Economic Questions: what, how, and for whom to produce Market Equilibrium aka Market clearing price - The point at which the demand and supply curves intersect this is “snapshot” of a given time and changes easily • This is sometimes a result of producers/suppliers responding to demand. • Suppliers also consider the costs of production (like transportation) along with the demand of consumers costs of production are another part of profit Equilibrium Demand is the Equilibrium Quantity: - Only includes the Quantity of a good or service demanded by a consumer that equals the quantity supplied by producers when the market is in equilibrium. - Remember, both EP and EQ still require the willingness and ability of both consumers and producers. QS ↑ QS ↓ P↓ P↑ QD↓ P↑ QD ↑ The marketplace when the price effect is at work. The market always seeks equilibrium. Remember… It’s a balance! Ex. Marshalls and Ross get products that didn’t initially sell from the original producers because they set their prices too high. Surplus: - When prices are set too high by producers, a surplus results because the quantity demanded is lower than the quantity supplied. - Businesses are left with too many goods because they are difficult to sell. Shortage: - If suppliers set their prices too low, a shortage results because the quantity demanded is higher than the quantity supplied. - Businesses are left struggling to keep up with consumer demands or can’t meet them. Ex. The new I Pad is produced assuming a lower demand or strategically planning to not produce enough for an estimated demand. Sale Round 1 Price Round 2 20 25 30 35 40 Xx X Xxx X xXxxx 45 50 Xxxx Xxxxx 55 60 65 70 75 80 85 X X Xx Xx X Xx Recession X X Xx Drought and Memory increase 15 X Xxxxxxxxxxxxxxxxxx X X Xxxxxxx Xxxxx Xxxxxxxxxx Xxx Xxxxxxxxxx Xxxxx Xxxxxxxxxxxxxxxxxxxxxx Xxxxxxxx Xxx X Xxx Xx Xx X Xx Xx Xxxxxxxxx X X X X Ask 3 questions: 1. Are we dealing with DEMAND or SUPPLY? 2. What is the specific good or service we are looking at? 3. Did the price of that good or service change? Price with markers! US Government bans imports of Chilean grapes. • What is the impact on the market for grapes? P Scientists determine fertilizers and pesticides cause health problems. S • What is the impact on the market for fruit and vegetables? D Q Equilibrium Price: Equilibrium Quantity: Explanation: New technology allows for less expensive production of televisions. • What is the impact on the market for televisions? Black Friday is next Friday • What is the impact on the market for clothes on Monday? Warm up 9/22/14 • During spring break, hotel rates rise significantly in many Florida cities. Why? • Can you think of other examples that illustrate this phenomenon? 9/22/14- Test on block day! And, I am out on Tuesday For 4th: I will also be out on Thursday (happy new year!) Critical Thinking Reflection- draft due 9/26, final due Tuesday 9/30 Agenda • Supply, demand, and price scenarios • Review surplus and shortage • Price floors and price ceilings Objectives • Review the terms Surplus and shortage • Define price floor and price ceiling • Practice graphing supply and demand Price with markers! The price of a product can vary depending on the time and place. Using the laws of supply and demand, explain the difference in price for each situation. Consider if it is impacting supply or demand a. Strawberries in January are more expensive than strawberries in July. b. Winter clothing on the store rack in November is more expensive than it is in March. c. Ice cream at a beach area is more expensive than at a different location. d. Day-old bread is less expensive than fresh bread. Shortage and Surplus • Copy the graph on the right onto your whiteboard • Graph just this change: the price of Flaming Hot Cheetos increases to $5 • Is this a shortage or a surplus? • Graph just this change: the price of Flaming Hot Cheetos goes down to $1 • Is this a shortage or a surplus? The Market for Flaming Hot Cheetos Consider, and graph, the following situations • MIT estimates that in Santa Clara county, a living wage (pay required to meet minimum standards of living) for one adult is $12.01/ hour. However, many jobs (such as food preparation, service, farming, fishing, and foresting jobs) earn $9.05 to 9.28. What can be done? • http://livingwage.mit.edu/counties/06085 • “The housing market’s ebbs and flows sent Charles and Christine Byers bouncing around the Bay Area, from San Francisco to the East Bay and then back again. But after living with their two children in a $2,500-a–month two-bedroom, one-bathroom home on 20th Avenue for almost five years, they soon might have to move into a recreational vehicle.” • http://www.sfexaminer.com/sanfrancisco/with-no-rent-control-tenantslosing-grip-on-single-family-homes/Content?oid=2652461 Price Floor: - A minimum price consumers are required to pay for a good or service – any price set by a producer below a price floor is illegal. - The goal is to push prices higher in the market, with profit motive in mind, which can help put more money into the economy. - Example: minimum wage in California is $8.00 and federal mw is $7.25. Price Ceiling Price Floor Sometimes the government decides to intervene in the market to make sure that scarcity is being addressed properly through price controls. Price Ceiling Price Floor Sometimes the government decides to intervene in the market to make sure that scarcity is being addressed properly through price controls. Price Ceiling: - A maximum price consumers may be required to pay for a specific good or service – any price set by a supplier above the ceiling is illegal. - This is to ensure that consumers can afford essential goods and services, especially necessities. It is usually in response to a natural disaster like a crop freeze. - Example: rent control is often set in cities to ensure affordable housing Price Floor = higher than equilibrium Price Ceiling = lower than equilibrium C.F.A. – Price Get out a half sheet of paper and write your name, date and period. Remember if you really do not know then write “IDK” or if you are guessing write “guess” next to your response. 1. Around the New Year holiday, hotel rates in Las Vegas go up. Who is responsible for this? A. B. C. D. 2. A shortage of MP3 players has occurred in stores during the holiday shopping season. All stores set their prices before the holiday season began. What explains the shortage? A. B. C. D. 3. The airlines because they lower their ticket prices. The consumers because more people travel to Las Vegas at that time. The hotels because they want to increase their profits to meet demand. No one, it is just a glitch in the marketplace. The price of MP3 players was set at the same level as the market clearing price. The price of MP3 players was set higher than the market clearing price. The price of MP3 players was set lower than the market clearing price. The price of MP3 players could be any amount the consumers were willing to buy. Graph what occurred in #2, and label the market clearing price (MCP), and the shortage price (SP). C.F.A. – Price Get out a half sheet of paper and write your name, date and period. Remember if you really do not know then write “IDK” or if you are guessing write “guess” next to your response. 4. If there is a surplus of a product, we can conclude that A. B. C. D. 5. quantity demanded exceeds quantity supplied. consumers want to buy more than is being made available by producers. the product’s price will rise. the product’s price is above equilibrium. Graph what occurred #4, and label the market clearing price (MCP), and the surplus price (SP). C.F.A. – Price 6. All else held equal, when there is an increase in supply, A. equilibrium price falls, demand does not change, and equilibrium quantity increases. B. equilibrium price falls, demand increases, and equilibrium quantity increases. C. equilibrium price rises, quantity demanded decreases, and equilibrium quantity decreases. D. equilibrium price falls, quantity demanded decreases, and equilibrium quantity decreases. 7. Graph what occurred in #6, and label: • • • • the original market clearing price - MCP1 the second market clearing price - MCP2 the original equilibrium quantity - EQ1 the second equilibrium quantity - EQ2 C.F.A. – Price Answers 1. Around the New Year holiday, hotel rates in Las Vegas go up. Who is responsible for this? A. B. C. D. 2. The airlines because they lower their ticket prices. The consumers because more people travel to Las Vegas at that time. The hotels because they want to increase their profits to meet demand. No one, it is just a glitch in the marketplace. A shortage of MP3 players has occurred in stores during the holiday shopping season. All stores set their prices before the holiday season began. What explains the shortage? A. B. C. D. The price of MP3 players was set at the same level as the market clearing price. The price of MP3 players was set higher than the market clearing price. The price of MP3 players was set lower than the market clearing price. The price of MP3 players could be any amount the consumers were willing to buy. C.F.A. – Price Answers 3. Graph what occurred in the question above, and label the market clearing price (MCP), and the shortage price (SP). P MCP SP Q 4. If there is a surplus of a product, we can conclude that A. B. C. D. quantity demanded exceeds quantity supplied. consumers want to buy more than is being made available by producers. the product’s price will rise. the product’s price is above equilibrium. 5. Graph what occurred in the question above, and label the market clearing price (MCP), and the surplus price (SP). P SP MCP Q 6. All else held equal, when there is an increase in supply, A. equilibrium price falls, demand does not change, and equilibrium quantity increases. B. equilibrium price falls, demand increases, and equilibrium quantity increases. C. equilibrium price rises, quantity demanded decreases, and equilibrium quantity decreases. D. equilibrium price falls, quantity demanded decreases, and equilibrium quantity decreases. 7. Graph what occurred in the question above, and label the original market clearing price (MCP1), the second market clearing price (MCP2), the original equilibrium quantity (EQ1), and the second equilibrium quantity (EQ2). S2 MCP1 MCP2 EQ1 EQ2 Price CFA Scores: Correct 7 6 5 4 3 2-0 Score Advanced Proficient Proficient Basic Below Basic FBB 1. Talk through the proposed floors and ceilings below with your neighbors. 2. For each one try and figure out how it would be implemented. 3. For each one come up with intended consequences and unintended consequences. Price Floors Price Ceilings • Raise the minimum wage to • Price ceiling for health $15 p/h insurance coverage • Price floors for companies like • Price ceiling for college Wal Mart tuition Demand, Supply, Price practice for each headline decide what the impact is going to be on quantit OR Supply OR Demand – indicate the shifter Price of Rubber Increases Dramatically Movie Increases Popularity of Baseball Hats Price of Running Shoes Drops Drastically Two New Blue Jeans Companies Enter the Marketplace Consumers Worry the Price of Computers May Increase Next Month Government Sets Price Ceiling Below Equilibrium Price to Help Consumers Save Money Insects Kill Half the World’s Tomato Crop Rececssion Hits – Many Consumers Lose Jobs (impact on movie ticket sales) Demand, Supply, Price practice for each headline decide what the impact is going to be on quantit OR Supply OR Demand – indicate the shifter Price of Computer Chips Falls (impact on computer market) Price of DVD Players Plummets (impact on DVD market) Price of Salmon Skyrockets (impact on tuna market) New, More Efficient Assembly Line Technology Introduced (automobile market) Government Places Sales Tax on Cigarettes to Discourage Smoking (impact on cigarette market) Government Sets Price Floor Above Equilibrium Price to Help Farmers (impact on milk market) • Sit wherever you like and get out a pencil. CTR #E1: In a different color, write “reviewed by (your name) • When you receive your scantron please write your name, date, class period and Unit 2.1 assessment and VERSION ___ In the margins, add the following notations where you find each expectation. • Please do not write on the assessment, read questions carefully and take your time. Use scratch paper provided as needed. • SCTY DEF– defines scarcity • When you’re done hand it in the assessment up front. Prompt: Which of the six principles of economic thinking most applies to addressing scarcity? • PET – conveys a clear claim identifying which of the Principles of Economic Thinking most applies to addressing scarcity • J/A – justifies the claim with effective selection and analysis of relevant content • Pick up your CTR #E1 first draft and exchange it with a partner. • CNT – includes relevant content from Unit 1 content rubric and Chpts 1, 2 & 4 • Do peer review of your partner’s draft following instructions on the right → • ADV:NI – generates inferences or use of evidence that is independent of instruction or text • Return CTR to your partner when you’re done. • ADV: ALT – explains an alternative response to the prompt • Spend whatever time is remaining either: • Working on other classes work • Reading one of the articles provided up front • Writing a draft of CTR #E1 if you don’t yet have one. At the end list the items they are missing in order to achieve proficiency. Add specific suggestions and constructive comments. Provide verbal feedback to your partner when appropriate.