Download Supply and Demand - Middletown High School

Warm-up – Wed. 4/15
Easter was Sunday, 4/05
 Describe the price of Easter candy on
Monday, 4/06, compared to Saturday
afternoon, 4/04?
 Explain the need for Easter candy on
Monday 4/06, compared to
Saturday afternoon, 4/04?
Lesson Essential Question
How do you visually
represent changes in an
economic system?
Vocabulary
Supply
Demand
Supply/Demand Curves
Incentives
Supply and Demand
Notes, Graphing, and Lots and Lots
of Practice!!!
“What is Economics?”
Read to get a handle on this topic.
It might be a quick review for you!
Grab a highlighter and a pen if you
don’t already have one out.
One thing to
remember!
Everything we discuss today is
assuming we are in a PERFECT
ECONOMIC WORLD!
The Basic Graph
(aka “The Starting Point”)
What do the letters mean?
 X axis = Q = Quantity
 Y axis = P = Price
 D = Demand
 S = Supply
The Basic Graph
(aka “The Starting Point”)
Equilibrium
What do the letters mean?
 “The Intersection” = Equilibrium
(shows perfect supply/demand)
 Q* = Quantity Demanded/Supplied
(at the equilibrium price)
 P* = Equilibrium Price
Definition for Supply
(represents Producers)
 The total amount of a good or
service producers are willing
and able to make at all prices
at a specific point in time.
Law of Supply
 States that as the price
increases the quantity supplied
also increases. The same
applies for a decrease in price.
or
DETERMINANTS – Things
That Could Shift (change) the
Supply of a Product
 Price and availability of land,
labor and/or capital (factors of
production) (e.g.: OJ v. cold winter)
 New technology (e.g.: cotton gin)
 Number of other sellers (e.g.:
grocery stores in M’town)
DETERMINANTS – Things
That Could Shift (change) the
Supply of a Product, cont.
 Price of other goods someone
could produce (e.g.: fresh fruits and/or
vegetables in the summer v. winter)
 Tax Policy (e.g.: GOVERNMENT
if taxes increase then overall cost goes up)
Let’s Practice!
Graphing a Shift in Supply
(start w/ the basic graph)
S2
S2
Graphing a Shift in Supply
 The NEW supply line (S2) is
called the Supply Curve.
 It is a graphic representation
of supply!
That’s Crazy – it’s a
straight line, but don’t
let that throw you off!
Graphing a Shift in Supply
(show the new price/quantity)
S2
E2
P2
Q2
Definitions for Demand
(represents Consumers)
 The total amount consumers
are willing and able to buy at
all prices at a specific point in
time.
Law of Demand
 States that as the price
increases the quantity
demanded decreases.
Same applies for a decrease
in price.
or
Determinants - things that
could shift (change) the
DEMAND for a product
 Tastes and fads (Q’back jerseys)
 Income (BMW dealerships in area)
 Number of buyers (Burger King)
Determinants - things that
could shift (change) the
DEMAND for a product, cont.
 Future price expectations
(small cars - when fuel prices go up)
 Price and availability of
Substitutes (“Uggs” v. “Fuggs”)
Compliments
(jam/jelly w/ PB)
Let’s Practice!
Graphing a Shift in Demand
(start w/ the basic graph)
D2
D2
Graphing a Shift in Demand
 The NEW Demand line is called
the Demand Curve.
 It is a graphic representation of
demand!
That’s Right Folks –
it’s also a straight line!
Graphing a Shift in Demand
(show the new price/quantity)
P2
E2
D2
Q2
Closer – Wed., 4/15
Please note the following on your closer worksheet:

Things you learned today

Ways you can use this material in the future

Nugget of advise to future students in this class
Warm-up – Thurs. 4/16
 Explain your answer:
The price of gold just went up! Is there
an increase or decrease in the …
supply of gold rings?
demand for silver?
A Quick
Reminder!
Everything we discuss today is
assuming we are in a PERFECT
ECONOMIC WORLD! You also are
focused on the HERE AND NOW!
Now that you’ve got the idea of supply,
demand and their determinants,
Let’s Get Graphing
but two last things . . .
Introducing
IRDL
He will be your best friend!
Always remember his name so you
know whether to shift right or left
(for either supply or demand). . .
I R D L stands for . . .
Increase
Right
Decrease
Left
You always want to ask the
same series of questions to help
you understand the information
that you will be graphing.
Questions to Prepare for Graphing
 What is the market you are graphing?
(good/service in the headline)
 Which determinant has changed?
 Does it affect supply or demand?
 Does supply/demand increase or decrease?
 Does the supply/demand curve shift right or
left?
 Note that questions #2 and #3 can be switched!
Imagine you are reading a
newspaper and come across the
following headlines . . .
Let’s Graph!
(white packet, p. 7)
Two Major Computer
Manufacturers Build Five
New Factories – graph computers
Two Major Computer Manufacturers Build
Five New Factories










What is the market you are graphing?
Computers
Which determinant has changed?
Price and Availability of Capital
Does it affect supply or demand?
Supply
Does supply increase or decrease?
Increase ↑
Does the supply curve shift to the right or left?
Right →
Supply of computers increases because
more factories are built.
S2
E2
P2
Q2
Try Another
Doctors announce benefits
of eating ice cream daily
Doctors announce the benefits of
eating ice cream daily










What is the market you are graphing?
Ice Cream
Which determinant has changed?
Taste and Fads
Does it affect supply or demand?
Demand
Does demand increase or decrease?
Increase ↑
Does the demand curve shift to the right or left?
Right →
Demand for ice cream increases
for health reasons
P2
E2
D2
Q2
Here’s a Tricky One
Car Manufacturer
Announces Plans for
SUV Price Increase in
Two Months
Don’t forget to ask the questions . . .
 What is the market you are graphing?
 Which determinant has changed?
 Does it affect supply or demand?
 Does supply/demand increase or
decrease?
 Does the curve shift to the right or left?
Demand for SUVs NOW!
E2
P2
D2
Q2
Always read the
headline for what it
is right now!
Try not to read into it too much!
Keep it simple!
More Supply/Demand
Practice Graphing
(yellow packet of graphs and other worksheets)
Hmmmmmm . . .
“The promise of his $20 allowance
was enough incentive to get Bob to
take out the trash.”
What is an “incentive”?
What incentives are there for people
to create new inventions?
Closer – Thurs., 4/16
“The promise of his $20 allowance
was enough incentive to get Bob to
take out the trash.”
Please write the following questions in your
notebook and answer:
What is an “incentive”?
What incentives are there for
people to create new inventions?
Closer – Thurs., 4/16
 Write the following statement on your sheet. Fill-in the
blanks with your own idea or ideas. Be ready to
share!
 Graphing Supply and Demand is _____________,
because _______________________.
 Graphing Supply and Demand is not as hard as I
thought it would be, because Mrs. Parker taught me
all the steps to do it well and I paid attention!
Toyota unveils new car
that gets 97 mpg!
Don’t forget to ask the questions!
•
•
•
•
What is the market you are graphing?
Which determinant has changed?
Does it affect supply or demand?
Does supply/demand increase or
decrease?
• Does the supply/demand curve shift to
the right or left?
Demand increases for Toyotas with
great gas mileage
P2
D2
Q2
Protected Owls
Discovered in Lumber
Forest!
Companies told to
discontinue logging.
Don’t forget to ask the questions!
•
•
•
•
What is the market you are graphing?
Does it deal with Supply or Demand?
Does supply increase or decrease?
Does the supply curve shift to the right or
left?
Supply of lumber (logging)
decreases due to protection of owls
S2
P2
Q2