JA EconomicsDemand – Chapter 3

http://www.youtube.com/watch?v=CouzZNjuyRM&feature=related

http://www.youtube.com/watch?v=kKAU856roF0&feature=related

Why it Matters

Consumer

Limited Income

Good choices

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FREE ENTERPRISE

Page 32

Influences of the Market Entrepreneurs bring new products to the

market

Interest in the new product

Economy evolved People traded with one another

Law of Demand

Demand

What does it mean?

Economists usage.

Page 33, “How many hamburgers would you buy?”

TEST QUESTION

Think of pricesTEST QUESTION

Diminishing marginal utility

Diminishing = reduced

Marginal =additional

Utility = satisfaction

Market Demand

Price Elasticity of demand Measurement

Indicator

See page 39 (milk and cola)

TEST QUESTION

Prices in 1990

Stamp: $0.25

Gallon of Gas: $1.16

Gallon Milk: $2.78

Prices in 2011

Stamp: $0.44

Gallon of Gas: $3.09

Gallon Milk: $3.67

Change in Demand Does a change in price change demand?

Look at page 41

What could cause the demand for gas to shift?

7 Factors that Affect Demand Change in Income Prices or Availability of Substitutes Prices or Availability of Complementary

Goods Change in the Weather or Season Change in the Number of Buyers Change in Styles, Tastes, Habits Change in Expectations

TEST QUESTION

Change in Income What can change your income?

Prices or Availability of Substitutes Public transportation

Prices or Availability of Complementary Goods Price of chips goes down due to sale…

What will consumer also buy? Shift to the right when the two goods

tend to be consumed or used together in relatively fixed or standardized proportions

Change in weather or season

Change in number of buyers

Shift to the right due to more quantity being demanded.

Changes in styles, tastes and habits. Electric cars

Change in expectations Consumers look to the future

Your Future

SUPPLY!

How does supply illustrate the price effect?

JA EconomicsSupply – Chapter 4

Why it Matters Understanding how the producers think.

What good and services to produce?

How should they be produced?

Who will they be produced for?

Price Effect Demand

Consumers buy less of something at a higher price than a lower price

Supply Producers are willing and able to produce

more at a higher price

Law of Supply

Graphing Supply

0 500 1000 1500 2000 2500 3000$0.00$0.20$0.40$0.60$0.80$1.00$1.20$1.40

Supply of Tortillas Produced by Casa de Tortillas

Market Supply

More than one producer in a market

Marginal Costs differ

Higher prices provide an incentive

Price Elasticity of Supply Like demand there is elasticity in supply Depends on the response or ability of

producers

Entrepreneurs Increase supplies

Raise employment

Push incomes higher

Price effect and supply

Changes in Supply Changes in marginal cost of production

Changes in the number of producers

Change in expectations

TEST QUESTION

Changes in Marginal Cost of Production Research

Worker suggestion for efficiency

Marginal cost of productions falls

Changes in the Number of Producers New businesses

Popularity

Change in Expectations Price of oil

Price of SUVs

Your Future

Market-Clearing Price

Combine chapters 3 and 4

Roles of prices in a market economy