Download Demand

Understanding Animal
Production
Understanding Supply and
Demand Concepts
Reminder: student learning activities are at the end of
this power point.
Teacher:Interest Approach
• Hold up a bag of candy. Ask the students
what they would do to get this candy.
Would they pay for it? Stay after school
and do extra work for it? How much is it
worth to them Briefly discuss the concept
of demand. Now give each student a
piece of candy
Teacher - Cont’
• Then hold up a whole bag of candy. Once
again, ask the students what they would
do for the bag of candy. Are as many
people still willing to give or do something
extra for the bag of candy? Why or why
not? Briefly discuss the concept of supply
with the students.
Common Core/Next Generation Standards Addressed!
• WHST.6‐8.1- Write arguments to support claims with clear reasons
and relevant evidence. (MS‐LS2‐4)
• SL.8.5 - Integrate multimedia and visual displays into presentations
to clarify information, strengthen claims and evidence, and add
interest. (MS‐LS1‐7),(MS‐LS2‐3) WHST.6‐8.1 Write arguments
focused on discipline content. (MS‐LS1‐4)
• WHST.6‐8.8 - Gather relevant information from multiple print and
digital sources; assess the credibility of each source; and quote or
paraphrase the data and conclusions of others while avoiding
plagiarism and providing basic bibliographic information for sources.
(MS‐LS4‐5)
Career Cluster Standards – Agriculture, Food
and Natural Resources.
• Pathway Content Standard: The student will
demonstrate competence in the application of
principles and techniques for the development
and management of agribusiness systems.
• ABS.01. Performance Element: Utilize economic principles to
establish and manage an AFNR enterprise.
• ABS.01.01. Performance Indicator: Apply principles of capitalism in
the business environment.
– ABS.01.01.01.a. Recognize principles of capitalism as related to AFNR
businesses
Bell Work
Terms
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Commodity
Demand
Elastic
Elasticity of demand
Elasticity of supply
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Fixed cost
Law of demand
Law of supply
Supply
Total Costs
Variable Costs
What is Supply?
• Supply is the amount of goods or services
offered for sale at a given time
• Law of supply- states that a producer will
supply fewer goods or services as prices
decrease and will supply more goods or
services as prices increase
– Elasticity of supplyvariability of supply
based on cost of
production
• Agricultural
commodities such as
livestock and crops
have less elasticity than
other commodities
– Commodity is any
good or product that
is sold
– Lack of elasticity is due to
high cost involved in
producing agricultural
commodities
• i.e. cost of raising cattle
• Costs may include land, feed,
medicines, milking machinery,
milk storage tanks, etc.
•
Cost can be broken down into three types:
1. Fixed costs-operating costs that are not directly
related to production; usually pre-determined and
usually cannot be changed
 Ex. taxes and insurance
2. Variable costs-directly related to production,
these will change over time
 Ex. labor, raw materials
3. Total costs- sum of fixed and variable costs
Types of Cost
Fixed Costs
Insurance
X
Taxes
X
Interest on
Investments
Land or Large
Machinery
Labor
X
Variable Costs
X
X
Feed
X
Medicines
X
Fuel
X
Seed, Fertilizer
X
What is demand?
• Demand is the desire for a commodity or
willingness to buy a commodity.
– Based on assumption that prices may differ
but everything else will remain constant,
however, not always true.
– People’s preference may change, substitutes
may become available, or number of people
in marketplace may fluctuate.
• Law of demand states
that people will buy
more of a product at
lower prices and less at
higher prices
– Ex. Corn dogs vs. pork
chops at a fair. The pork
chop may be have a
more desirable taste but
cost more. Therefore,
more corn dogs will be
sold due to the price
• Elasticity of demand is the variability of the
amount of goods or services that will be
purchased at various prices
– Ex. Beef tends to be higher in price than pork
and is often more desirable flavor. Consumers
will buy the pork because it will still meet their
dietary needs and cost less. This make beef
elastic.
– Elastic means that a product is sensitive to
changes in price.
What happens when there is a change
in supply or demand?
• Changes in supply or
demand refer to overall
changes in the products and
services provided and the
demand for them
– Change in supply may be a
decrease in milk supply due to
widespread mastitis infections.
– Change in supply may also be caused by an
increase in wheat production due to extremely
fair weather conditions.
– Both situations caused a change in supply but
did not effect the change in demand.
– Excess supply will result in lower prices.
• Change in demand is anything that causes
consumers to buy more or less of a
product despite its price
– Changes can result from availability and
prices of comparable commodities and
changes in public perception.
• Public perception is a direct result of advertising
Review
• What is Supply?
• What is demand?
• What happens when there is a change in supply
or demand?
The End!
Student Learning Activities
• Sample tests are available in the Lesson
Plan tab.
What's the price?
Name: ____________________________
Read each statement in the cause Colum. Product what will happen to the price and explain why.
Cause
Effect
Today is the day before the 4th of July holiday
and the fireworks stand is almost out of
fireworks. What will happen to the price of
fireworks?
The price will _____________ because
______________________________________
______________________________________
__________________________.
There are lots of holiday ornaments still on the
store shelves the day after Christmas. What will
happen to the price of the ornaments?
The price will _____________ because
______________________________________
______________________________________
__________________________.
An oil will explosion redoes the amount of oil
available to make gasoline for cars and trucks.
What will happen to the price of gas?
The price will _____________ because
______________________________________
______________________________________
__________________________.
A car dealer has to many cars of last year’s
model still on his lot left to sell. The new models
will be delivered next week, what will happen to
the price of last year’s model cars?
The price will _____________ because
______________________________________
______________________________________
__________________________.
A bakery accidentally bakes to many cupcakes
one morning. Instead of 50 cupcakes they now
have 500. What will happen to the price of the
cupcakes?
The price will _____________ because
______________________________________
______________________________________
__________________________.