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SUPPLY AND DEMAND (3.2.2) Table of Contents Begin Copyright © 2013 N.S. End Show Table of Contents Access Prior Knowledge Set Goals New Information Activity Conclusion Demand Survey “Law of Demand” Targets Definition Changes in Demand “Law of Demand” Targets Demand Can Change In Two Ways You Draw the Graph Increases Demand Decreases Demand The Effects of Shifting Demand Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Demand Survey Circle the product that has been assigned to your group. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Demand Survey Circle the product that has been assigned to your group. Price Range Number Who Would Pay This as the Highest Price (Put Tallies Here) Totals Actual Demand Highest Lowest Prepare Ranges Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Demand Survey Circle the product that has been assigned to your group. Price Range Highest Number Who Would Pay This as the Highest Price (Put Tallies Here) Totals Actual Demand $6.00 $5.00 $4.00 $3.00 $2.00 Lowest $1.00 Prepare Ranges Title Page Table of Contents Poll Classmates Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Demand Survey Circle the product that has been assigned to your group. Highest Lowest Title Page Price Range Number Who Would Pay This as the Highest Price (Put Tallies Here) $6.00 I $5.00 III $4.00 II $3.00 I $2.00 II $1.00 I Prepare Ranges Poll Classmates Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Totals Actual Demand Fill In This Column Forward Resources End Show Demand Survey Circle the product that has been assigned to your group. Highest Lowest Title Page Price Range Number Who Would Pay This as the Highest Price (Put Tallies Here) Totals $6.00 I 1 $5.00 III 3 $4.00 II 2 $3.00 I 1 $2.00 II 2 $1.00 I 1 Prepare Ranges Poll Classmates Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Fill In This Column Forward Resources Actual Demand Fill In This Column End Show Demand Survey Circle the product that has been assigned to your group. Highest Lowest Price Range Number Who Would Pay This as the Highest Price (Put Tallies Here) Totals $6.00 I 1 1 $5.00 III 3 4 $4.00 II 2 6 $3.00 I 1 7 $2.00 II 2 9 $1.00 I 1 10 Prepare Ranges Poll Classmates Fill In This Column Actual Demand Fill In This Column Graph the Data Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Demand Survey Price Range Actual Demand $6.00 1 $5.00 4 $4.00 6 $3.00 7 $2.00 9 $1.00 10 Draw the Graph Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Demand Survey Price Range Actual Demand $6.00 1 $5.00 4 $4.00 6 $3.00 7 $2.00 9 $1.00 10 What relationship does your graph illustrate between “Quantity Demanded” and Price?” Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show “Law of Demand” Targets Knowledge Understand the relationship between price and quantity demanded. Reasoning Explain why demand curves might shift. Skill Draw shifts in demand curves. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Definition If all things are equal, consumers will demand more of a product as its price decreases, and less of a product as its price increases. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Definition If all things are equal, consumers will demand more of a product as its price decreases, and less of a product as its price increases. 1) Lower prices are an incentive for consumers. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Definition If all things are equal, consumers will demand more of a product as its price decreases, and less of a product as its price increases. 1) Lower prices are an incentive for consumers. 2) Higher prices for the same item will deter consumers. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Demand Can Change in Two Ways 1) Change in “Quantity Demanded” Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Demand Can Change in Two Ways 1) Change in “Quantity Demanded” • This is just a change along the demand curve. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Demand Can Change in Two Ways 1) Change in “Quantity Demanded” • This is just a change along the demand curve. For example, the price for lemonade might change from $2.00 to $1.00 Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Demand Can Change in Two Ways 1) Change in “Quantity Demanded” • This is just a change along the demand curve. • Notice how the blue demand line did not move. Just price changed, so we moved from one “quantity” to another. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Demand Can Change in Two Ways 1) Change in “Quantity Demanded” • This is just a change along the demand curve. • Notice how the blue demand line did not move. Just price changed, so we moved from one “quantity” to another. 2) Change in “Demand” Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Demand Can Change in Two Ways 1) Change in “Quantity Demanded” • This is just a change along the demand curve. • Notice how the blue demand line did not move. Just price changed, so we moved from one “quantity” to another. 2) Change in “Demand” • This is a shift of the entire demand curve either “left” or “right.” Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Demand Can Change in Two Ways 1) Change in “Quantity Demanded” • This is just a change along the demand curve. • Notice how the blue demand line did not move. Just price changed, so we moved from one “quantity” to another. 2) Change in “Demand” • This is a shift of the entire demand curve either “left” or “right.” For example, this might be a really hot day, so more people want lemonade Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Demand Can Change in Two Ways 1) Change in “Quantity Demanded” • This is just a change along the demand curve. • Notice how the blue demand line did not move. Just price changed, so we moved from one “quantity” to another. 2) Change in “Demand” • This is a shift of the entire demand curve either “left” or “right.” • Notice how the new blue demand line shows that more lemonade will be demanded at every price. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. D2 Forward Resources End Show You Draw the Graph On your notes there is a graph labeled “Increase in Demand.” Draw an increase in demand on that graph. Increase in Demand Draw This Graph Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show You Draw the Graph On your notes there is a graph labeled “Increase in Demand.” Draw an increase in demand on that graph. Increase in Demand D2 Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show You Draw the Graph On your notes there is a graph labeled “Increase in Demand.” Draw an increase in demand on that graph. On your notes there is a graph labeled “Decrease in Demand.” Draw a decrease in demand on that graph. Increase in Demand Decrease in Demand D2 Draw This Graph Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show You Draw the Graph On your notes there is a graph labeled “Increase in Demand.” Draw an increase in demand on that graph. On your notes there is a graph labeled “Decrease in Demand.” Draw a decrease in demand on that graph. Increase in Demand Decrease in Demand D2 D2 Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Increases Demand There are six factors that will cause demand to increase. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Increases Demand There are six factors that will cause demand to increase. 1) Consumers enter the market Examples include an increase in the birth rate, an influx of immigrants, or students arriving in a college town. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Increases Demand There are six factors that will cause demand to increase. 1) Consumers enter the market 2) Consumers have more money Whenever people have more money (raise, tax refund, etc.), they are willing and able to spend it on more things. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Increases Demand There are six factors that will cause demand to increase. 1) Consumers enter the market 2) Consumers have more money 3) Consumers expect good things to happen in the future If consumers think they will have more money in the future or that the economy will grow (along with prices), they will purchase now. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Increases Demand There are six factors that will cause demand to increase. 1) Consumers enter the market 2) Consumers have more money 3) Consumers expect good things to happen in the future 4) Product is a fad (popular) Items may become more popular due to a shift in tastes. This may happen because of fads, beliefs, culture, or advertising. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Increases Demand There are six factors that will cause demand to increase. 1) Consumers enter the market 2) Consumers have more money 3) Consumers expect good things to happen in the future 4) Product is a fad (popular) 5) Price of a substitute good increases Title Page Table of Contents Back If an item that serves a similar function (substitute) becomes expensive, consumers will demand more of the original item. Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Increases Demand There are six factors that will cause demand to increase. 1) Consumers enter the market 2) Consumers have more money 3) Consumers expect good things to happen in the future 4) Product is a fad (popular) 5) Price of a substitute good increases 6) Price of a complementary good decreases Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. When goods are consumed together (complements), a decrease in the price of one makes both more appealing. Forward Resources End Show Decreases Demand There are six factors that will cause demand to decrease. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Decreases Demand There are six factors that will cause demand to decrease. 1) Consumers leave the market Examples include a decrease in the birth rate, people moving away, or students leaving a college town for the summer. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Decreases Demand There are six factors that will cause demand to decrease. 1) Consumers leave the market 2) Consumers have less money Consumers will obviously not be able to buy as much if less money is available. This can be caused by unemployment, taxes, etc. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Decreases Demand There are six factors that will cause demand to decrease. 1) Consumers leave the market 2) Consumers have less money 3) Consumers expect bad things to happen in the future If consumers think they will have less money in the future or that the economy will shrink (along with prices), they will purchase later. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Decreases Demand There are six factors that will cause demand to decrease. 1) Consumers leave the market 2) Consumers have less money 3) Consumers expect bad things to happen in the future 4) Product goes out of style Items may become less popular due to a shift in tastes. Products that were once in style may suddenly become out of favor. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Decreases Demand There are six factors that will cause demand to decrease. 1) Consumers leave the market 2) Consumers have less money 3) Consumers expect bad things to happen in the future 4) Product goes out of style 5) Price of a substitute good decreases Title Page Table of Contents Back If an item that serves a similar function (substitute) becomes inexpensive, consumers will switch their demand to the substitute. Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Decreases Demand There are six factors that will cause demand to decrease. 1) Consumers leave the market 2) Consumers have less money 3) Consumers expect bad things to happen in the future 4) Product goes out of style 5) Price of a substitute good decreases 6) Price of a complementary good increases Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. When goods are consumed together (complements), an increase in the price of one makes both less appealing. Forward Resources End Show The Effects of Shifting Demand When the demand curve shifts, it affects quantity and price. Complete the table (on your notes) by deciding whether quantity and price increase or decrease for each scenario. Use the graphs to help you. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show The Effects of Shifting Demand When the demand curve shifts, it affects quantity and price. Complete the table (on your notes) by deciding whether quantity and price increase or decrease for each scenario. Use the graphs to help you. Effect on Quantity Effect on Price Increase in Demand Show Answers Decrease in Demand Draw the Graphs Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show The Effects of Shifting Demand When the demand curve shifts, it affects quantity and price. Complete the table (on your notes) by deciding whether quantity and price increase or decrease for each scenario. Use the graphs to help you. Effect on Quantity Effect on Price Increase in Demand Show Answers Decrease in Demand Increase in Demand Decrease in Demand D2 D2 Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show The Effects of Shifting Demand When the demand curve shifts, it affects quantity and price. Complete the table (on your notes) by deciding whether quantity and price increase or decrease for each scenario. Use the graphs to help you. Increase in Demand Decrease in Demand Effect on Quantity Effect on Price Increases () Decreases () Increases () Decreases () Increase in Demand Decrease in Demand D2 D2 Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Changes in Demand DIRECTIONS On the front side, fictional newspaper headlines illustrate the market for butter. Determine if the quantity demanded changed (which means only the price of butter has changed), or if the entire demand has changed. If only quantity demanded changed, circle “No Change.” If the entire demand has changed, identify if it was an increase or a decrease, and identify which determinant of demand is responsible. The determinants of demand are listed in the box. On the back side, you will graph these changes. GRAPH CHANGES IN DEMAND For each of the headlines listed on the front side, draw the appropriate change in demand on the graph. Remember, an Increase means the line moves to the right, a Decrease means the line moves to the left, and No Change means the line stays the same. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show “Law of Demand” Targets Knowledge Understand the relationship between price and quantity demanded. Reasoning Explain why demand curves might shift. Skill Draw shifts in demand curves. Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show Resources Title Page Table of Contents Back Last Slide Viewed Copyright © 2012 N.S. Forward Resources End Show