Unit #1 Benchmark TEST 25 questions Take out a pencil and clear your desk. 30 minutes NEXT
Warm Up #10 When I buy something, I usually expect… List characteristics of the goods or services that are supposed to be provided. 5 minutes NEXT
Class Confession We the Senior Class of 2016 will complete ALL of our assignments to best of our abilities and behave appropriately in class. We will respect all faculty, staff, substitutes, classmates, and especially Mr. Wilcox. We will graduate on time May 20, 2016 and become productive citizens in society. NEXT
Scaffold understanding of the standard(s) and/or element(s). Paraphrase the standard(s) and/or element(s). Rewrite the standard including synonyms or brief definitions in parentheses and in a different color following the key terms found in step 1. SSEMI 2 You will be able to explain how the Law of Demand (want), the Law of Supply (amount), prices (values), and profits (earnings) work to determine production and distribution (delivery) in a market (shop) economy. NEXT
The Law of Demand What is Demand? You will be able to explain how the Law of Demand, the Law of Supply, prices, and profits work to determine production and distribution in a market economy. NEXT
Chapter 4: Demand KEY CONCEPT Demand is the willingness to buy a good or service and the ability to pay for it. WHY THE CONCEPT MATTERS *The concept of demand is demonstrated every time you buy something. Think of five goods or services that you have purchased. Which of them would you stop buying if the price rose sharply? NEXT
2 important conditions of Demand 1. People are willing to purchase it 2. People are able to purchase it $200 NEXT 7
So what influences YOU to purchase an item or not? NEXT
The Price As the price increases consumers buy less. As the price decreases consumers buy more. P ↑, QD↓ P ↓, QD↑ P= Price QD= Quantity Demanded NEXT
This is the Law of Demand There is an inverse relationship between a product’s price and the quantity demanded. *Law of demand explains consumer behavior as well as economic concept. NEXT 10
How do producers come up with these prices anyway? NEXT
Demand Schedules KEY CONCEPTS • Demand schedule- a table that summarizes one consumer’s behavior *Lists how much of an item an individual will buy at each price NEXT
Quantity Demanded to Price A Demand Schedule Price of Widgets Number of Widgets People Want to Buy $1. 00 100 $2. 00 90 $3. 00 70 $4. 00 40 NEXT 13
Demand Curves KEY CONCEPTS • Demand curve- a graph that shows amount of an item a consumer will buy at each price – Demand curves graphically show information found on demand schedules – Vertical axis shows prices – Horizontal axis shows quantities demanded – Demand curves slope down from upper left to lower right NEXT
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What demand schedules and demand curves illustrate? Demand schedules show in table format • the quantity of goods and services consumers are willing and able to purchase at each price in the market. Demand curves show in graph format • the data listed in demand schedules • How much of goods and services consumers will buy at a price NEXT 16
Closure Activity #8: Vera Wang: Designer in Demand p. 104 Responding to Demand • • Sophisticated wedding gowns not available for career women Wang created line of wedding gowns to meet demand Style became popular; other designers imitated Wang created more demand for her style by designing other products • Answer Analyzing Cause and Effect D. on the lines below. 5 minutes __________________________________________________________ NEXT
Show What You Know! Georgia Milestone Practice Question In economics, the amount of a product a consumer is willing and able to buy at various possible prices during a given time is called Supply Demand Substitution Utility NEXT
Show What You Know! Georgia Milestone Practice Question If the price for an item continues to increase what will happen to the quantity demanded It will fall It will fluctuate It will increase It will remain the same NEXT
Show What You Know! Georgia Milestone Practice Question The quantity of goods that consumers are willing and able to buy at a series of prices can be listed on a demand Graph Schedule Curve Line NEXT
Show What You Know! Georgia Milestone Practice Question When people use their resources so that marginal benefits exceed marginal costs, they Make rational economic decisions Make irrational economic decisions Eliminate the opportunity costs of decisions Fail to use resources efficiently NEXT
Show What You Know! Georgia Milestone Practice Question When people make more money they usually Save more Spend more Sell more things Have more interest NEXT
THE END Any Questions? Any Questions? NEXT 23
Warm Up #11 Draw demand curves from the demand schedules in each group from the white board. 5 minutes NEXT
Class Confession We the Senior Class of 2016 will complete ALL of our assignments to best of our abilities and behave appropriately in class. We will respect all faculty, staff, substitutes, classmates, and especially Mr. Wilcox. We will graduate on time May 20, 2016 and become productive citizens in society. NEXT
SSEMI 3 You will be able to explain how the markets, prices, and competition influence economic behavior. a. Identify and illustrate on a graph factors that cause changes in market demand. Determine and define vocabulary. Identify key terms within the standard. Define each term. ________________________________________ ________________________________________ NEXT
Scaffold understanding of the standard(s) and/or element(s). Paraphrase the standard(s) and/or element(s). Rewrite the standard including synonyms or brief definitions in parentheses and in a different color following the key terms found in step 1. You will be able to explain (describe) how the markets, prices, and competition (rivalry) influence (effect) economic behavior. a. Identify (recognize) and illustrate (demonstrate) on a graph factors (issues) that cause changes in market demand. NEXT
Determinants of Demand You will be able to explain how the markets, prices, and competition influence economic behavior. a. Identify and illustrate on a graph factors that cause changes in market demand. NEXT
What Factors Affect Demand? KEY CONCEPTS • • • Law of diminishing marginal utility – marginal benefit of each additional unit declines as each unit is used Income effect – amount people buy changes as purchasing power of their income changes Substitution effect – amount people buy changes as they buy substitute products NEXT
Change in Quantity Demanded KEY CONCEPTS • Change in quantity demanded – change in amount consumers buy because of change in price – each change shown by new point on demand curve –Does not shift the demand curve itself NEXT
Change in Quantity Demanded EXAMPLE: Changes Along a Demand Curve • Individual demand curve – change in quantity demanded shown by movement to right or left along the curve • Market demand curve – shows similar information for entire market NEXT
Change in Demand KEY CONCEPTS • Change in demand is caused by a change in the marketplace – prompts people to buy different amounts at every price – also called shift in demand Six factors can cause change in demand NEXT
Non-Price Determinants of product demand shifts: C-onsumer tastes and preferences R-elated Goods Price/Complementary goods I- ncome M-arket Size E-xpectations (consumer) S-ubstitues NEXT
Change in Demand FACTOR 1 Consumer Tastes and Preferences • Consumer tastes change; products gain and lose popularity • Consumers demand a greater amount of popular items at every price • Sellers advertise to create demand for products – i. e. Air Force Ones NEXT
Change in Demand FACTOR 2 Related Goods/Complements • Complements—goods that are used together • Rise in demand for one increases the demand for the other • If price of one product changes, demand for both changes in same way – if price of one rises, demand for both will drop NEXT
Change in Demand FACTOR 3 Income • A person’s ability to buy goods changes as his or her income changes • As incomes of most consumers in a market change, so does total demand – Normal goods- demanded more when consumers’ incomes rise – Inferior goods- demanded less when consumers’ incomes rise NEXT
Change in Demand FACTOR 4 Market Size • As number of consumers in an area changes, so does market size – i. e. Moody Air Force Base • Demand for most goods changes as market size changes – rise in population leads to increased demand – decrease in population leads to decreased demand NEXT
Change in Demand FACTOR 5 Consumer Expectations • Expectations about future price of items affect individual behavior – expected rise or fall in price can decide whether to buy now or wait • Expectations of all consumers in a market affect demand – example: because cars go on sale at end of summer, demand goes up then NEXT
Change in Demand FACTOR 6 Substitutes • Substitutes—products used in place of each other – if price of substitute drops, people buy it instead of original item – if price of original item rises, people will buy substitute $2 $1. 50 NEXT
Show What You Know! Georgia Milestone Practice Question When economics refer to “demand” they mean which of the following? How much satisfaction buyers receive from a purchase How much consumers will purchase at different prices How much sellers will supply at different prices How much people want the product if its free NEXT
Show What You Know! Georgia Milestone Practice Question Which of the following is an attempt by a firm to increase the demand for its product? the imposition of a price ceiling on the product an advertising strategy designed to change consumer tastes and preferences a marketing strategy to make the good scarce and therefore more expensive a production strategy to flood the market with the good or service NEXT
Show What You Know! Georgia Milestone Practice Question The principle that producers will only produce goods that will yield them a profit because it is something consumers want is known as the: Law of diminishing marginal utility Law of demand Equity price Price elasticity NEXT
Closure Activity #9 Worksheet 5 A Worksheet 5 B Worksheet 5 C Determinants of Demand Worksheet NEXT
THE END Any Questions? Any Questions? NEXT 44
Warm Up #12 Get a Math Skills: Demand Calculating Elasticity of Demand off of the podium. 5 minutes NEXT
Class Confession We the Senior Class of 2016 will complete ALL of our assignments to best of our abilities and behave appropriately in class. We will respect all faculty, staff, substitutes, classmates, and especially Mr. Wilcox. We will graduate on time May 20, 2016 and become productive citizens in society. NEXT
SSEMI 3 c c. Define price elasticity of demand supply. Determine and define vocabulary. Identify key terms within the standard. Define each term. ________________________________________ ________________________________________ NEXT
Scaffold understanding of the standard(s) and/or element(s). Paraphrase the standard(s) and/or element(s). Rewrite the standard including synonyms or brief definitions in parentheses and in a different color following the key terms found in step 1. Define price elasticity (resistance) of demand (want) and supply (quantity). NEXT
Elasticity of Demand SSEMI 3 c c. Define price elasticity of demand supply. NEXT
Elasticity of Demand KEY CONCEPT • Buying habits affected by type of product and importance to consumer • Elasticity of demand – The degree or measure of how responsive consumers are to price changes NEXT
Elastic Demand 1. Elastic—quantity demanded changes greatly as price changes i. e. Cereal NEXT
Elastic Demand Slight change in price causes HUGE drops in demand. NEXT
Inelastic Demand 2. Inelastic—quantity demanded changes little as price changes i. e. Gas NEXT
Inelastic Demand Slight changes in price does little for demand NEXT
Difference between elastic and inelastic demand: Elastic demand- when a small change in a product’s price results in a significant change in the quantity demanded (i. e. price of pizza) Inelastic demand- when a change in a product’s price has only a slight effect on the quantity demanded (i. e. salt & gas) NEXT
What Determines Elasticity? Three KEY CONCEPTS affect elasticity of demand 1. availability of substitutes 2. proportion of income spent on good or service 3. whether product is a necessity or luxury NEXT
What Determines Elasticity? FACTOR 1 Substitute Goods or Services • If no substitute for a product, demand tends to be inelastic – when price of insulin goes up, diabetics still need the same amount • If there are substitutes for a product, demand tends to be elastic – when price of beef goes up, consumers can buy other meats NEXT
What Determines Elasticity? FACTOR 2 Proportion of Income • Demand for expensive items tends to be elastic – if percentage of income needed to buy item increases, demand decreases • Demand for inexpensive items tends to be inelastic – rise in price requires small additional part of income • Rise in income can lead to greater demand for some goods or services NEXT
What Determines Elasticity? FACTOR 3 Necessity or Luxury • Necessity—something needed for life – demand for necessities is inelastic • Luxury—something desired but not essential – demand for luxuries tends to be elastic NEXT
Total Revenue Test KEY CONCEPTS Total revenue- amount of money company gets for selling its products – Formula: TOTAL REVENUE = P (price) x Q (quantity sold) Total revenue test- shows total revenue from item at various prices – if total revenue increases after price drops, demand is elastic – if total revenue decreases after price drops, demand is inelastic NEXT
Total Revenue Test EXAMPLE: Revenue Table • Revenue table shows elasticity of demand by listing – prices at which item can be sold – quantity of item demanded at each price – total revenue received from sale of item at each price Valdosta Stadium Cinemas Quantity Total Demanded Revenue ($) $13 1500 19, 500 $11 2000 22, 000 $9 8000 72, 000 $6 11000 66, 000 $4 17000 68, 000 NEXT
Closure Activity #10 Complete the Total Revenue Table and determine if the item is elastic or inelastic. Price of Greebes Quantity Demanded $20 295 $18 300 $16 325 $12 375 $9 400 Circle one Elastic Total Revenue ($) Inelastic NEXT
Show What You Know! Georgia Milestone Practice Question If the price of milk increases slightly, the demand for milk will NOT change very much. This market situation is an example of Demand elasticity Demand inelasticity Supply inelasticity NEXT
Show What You Know! Georgia Milestone Practice Question If the price of new cars decreases slightly, the demand for new cars is likely to increase greatly. This market situation is an example of Demand elasticity Demand inelasticity Supply inelasticity NEXT
THE END Any Questions? Any Questions? NEXT 65
Chapter 4 TEST Tomorrow!! Demand Law of demand Demand schedule Determinant of Demand curve Market demand curve Law of diminishing marginal utility Income effect Substitution effect Normal goods Inferior goods Substitutes Complements Elasticity of demand Elastic Inelastic Total revenue test Purchasing Power **Be able to shift the demand curve left or right. NEXT
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