09/03/14 warm-up: use laptops to check rubric scores on ppc curve in turn it in.com determine...
TRANSCRIPT
09/03/14
Warm-up: Use Laptops to Check Rubric Scores on PPC
Curve in Turn it in.com Determine whether to complete alternative assignment to improve your score
Double check for submission of An Economic Story as final assessment of Foundations of Economics Unit.
Time to think!
What do you consider when making a purchase?
Did anyone choose not to bid?
What did you consider when bidding?
What happened to quantity demanded as price increased?
Why?
Candy Auction
The quantity demanded of a good falls when the price rises (and vice versa), ceteris paribus
A change in price will lead to a change in quantity demanded
A demand curve is downward sloping
The Law of Demand
D
P
Q
Market for…
I.O.U.s How did your
decisions change with the introduction of I.O.Us?
The demand curve shifts whenever there is a change in quantity demanded at every price level.
Candy Auction #2
Income
Prices of Related Goods
Tastes/Preferences
Expectations
Number of Buyers
Change in Demand
Labeling a Market Graph
P
Q
Market for____________
DEMAND
The law economists are most sure of!
The quantity demanded of a good/service when the price (and vice versa), ceteris paribus
A change in price will lead to a change in quantity demanded
The Law of Demand
D
P
Q
Market for…
Any movement along the demand curve indicates a change in quantity demanded
A change in price cannot change demand, it can only change quantity demanded!
Movement Along the Curve
A change in demand means the quantity demanded at every price has changed
Changes (Shifts) in Demand
An in demand means the quantity demanded has at every price
The demand curve shifts to the right
Increase in Demand
A in demand means the quantity demanded has at every price
The demand curve shifts to the left
Left is less!
Decrease in Demand
The Hudsucker Proxy (1994)
8/28/14
Warm-up: Assume the market for pizza is perfectly competitive. If the price of pizza rises, what happens to
the quantity of pizza demanded? If the price of pizza rises, what happens to
the demand for pizza?
Learning Goal
Students will be able to… Identify the determinants of demand. Accurately graph changes in demand.
1) Income
2) Prices of Related Goods
3) Tastes/Preferences
4) Expectations
5) Number of Buyers (Population size)
Determinants of Demand
The effect of income on demand depends on the type of good
normal good: a good for which an y, leads to an D, ceteris paribus (the reverse is also true)
inferior good: a good for which an y leads to a D, ceteris paribus (the reverse is also true)
Income (y)
substitutes: two goods for which an P of one leads to an D for the other (the reverse is true too)
muffins & doughnuts; coffee & tea; movie tickets & DVD rentals
Prices of Related Goods
complements: two goods for which an P of one leads to a D for the other (the reverse is true too)
peanut butter & jelly; printers & ink cartridges; hotdogs & hotdog buns
Prices of Related Goods, Continued
Tastes/Preferences
If consumers come to prefer a good, D
If a good or service falls out of favor, D
1) Expectations of future income
Expectations of higher income leads to an D
Expectations of a lower income leads to a D
Expectations
Your Task
Using a ½ sheet of graph paper, draw a correctly labeled market graph.
Use the demand schedule to illustrate our first demand curve (D1)
Show the change in demand that came with an increase in income (D2) Be sure to show the shift with an arrow
2) Expectations of future prices
Expectations of higher prices leads to an D
Expectations of lower prices leads to a D
Expectations
Number of Buyers (Think Population)
An increase in the number of buyers leads to an D
A decrease in the number of buyers leads to a D
Demanding INSECT
Income Number of buyers Substitutes Expectations Complements Tastes
You MUST memorize the determinants of demand!!!
How much less of the good would you buy if….
The price of gum doubled? Explain.
The price of gasoline doubled? Explain.
The price of Starbucks drinks doubled? Explain.
Warm-up: Imagine you are a business owner who would like to generate more revenue. Should you raise or lower prices? Explain.
8/28/14
IT DEPENDS!
Learning Goal
Students Will Be Able To (SWBAT) - State the law of demand; Graph a demand curve and explain its appearance.
SWBAT: define and calculate price elasticity of demand, identify the determinants of elasticity, and apply the concept of elasticity to business decisions.
Learning Goal
How much less of the good would you buy if….
The price of deoderant doubled? Explain.
The price of gasoline doubled? Explain.
The price of Starbucks drinks doubled? Explain.
Your Task
Read “Price Elasticity of Demand”
Code the reading using the following symbols
! – This seems important
? – This is a little confusing
✔ - This makes a lot of sense
Look over the “Questions for Discussion”
Review your coding with your partner and work together to respond to the “Questions for Discussion
Jingle All The Way (1996)
Jingle All The Way (1996)
Rank the goods/services in terms of price elasticity of demand
The first item should be the one for which consumers would be most sensitive/responsive to a change in price – those with the most elastic demand
The last item should be the one for which consumers would be least sensitive/responsive to a change in price – those with the most inelastic demand
Your task
Fresh Tomatoes (4.6) Foreign Travel (4.0) Restaurant Meals (2.3) Tires (0.95) DVDs (0.9) Physician Services (0.6) Tobacco (0.45) Coffee (0.25) Gasoline (0.2) Salt (0.1)
Most Elastic to Most Inelastic
When quantity demanded does not respond at all to changes in price
Price elasticity of demand = 0
Air, water, electricity, insulin, drugs (for an addict)
Perfect Inelasticity
When quantity demanded will drop to zero as a result of a price increase
price elasticity of demand = ∞
Goods in a perfectly competitive market
Perfect Elasticity
When the quantity demanded changes by the same percentage as a change in price
Price elasticity of demand = 1
Downward sloping demand curve
Most goods/services have a price elasticity of demand between .5 and 1.5
Unit Elastic
Get laptop and review Rubric Scores posted on PPC Quiz in Turn it in, and make appointment to submit alternative quiz to improve your scores.
Check to ensure that “An Economic Story” – final summative assessment for Foundations Unit is submitted to TII.
Journal Question– Copy and Respond: How do firms use elasticity to make decisions?
09/03/14 Warm Up:
Relative Elasticity
If D for a good is unit elastic an in price does not change total revenue
If D for a good is inelastic in price leads to an total revenue
If D for a good is elastic in price leads to a total revenue
Total Revenue Test