Day 5

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Day 5

  1. 1. Bellringer 1. Get out the elasticity handout and complete the bottom portion
  2. 2. Sophomores vs. Juniors vs. Seniors game Laila version Winners get +5 Quantitative Easing points New rule: can’t go up twice in a row or more than 3 times total
  3. 3. White boards Which part of TRIBE will change in the following scenarios to the Tucson gasoline market? & increase or decrease 1. Summer vacation time 2. Used cars get more expensive 3. Alaskan oil spill, consumers think gas prices will increase next month 4. Sun Tran rates increase by 10% 5. Tesla electric cars get cheaper 6. New freeway connects Eastside with rest of Tucson
  4. 4. White boards Which part of TRIBE will change in the following scenarios to the Spam market & increase or decrease? 1. US unemployment falls by 1% 2. Price of bacon drops by 5% 3. Restaurant prices increase after US minimum wage increase 4. TUSD stops selling school lunches, students must bring lunch from home 5. Median wage increases in Arizona
  5. 5. White boards Which part of TRIBE will change in the following scenarios to the potato chip market? & increase or decrease 1. Americans try to eat healthier 2. Consumers think price of potatoes will decrease next month 3. Hotdog prices plummet 4. Your school stops selling school lunches, students must bring lunch from home 5. Population of US increases by 12%
  6. 6. Bellringer • In your notes, write the minimum per hour I would have to pay you to clean up this yard. Should take about 5 hours Pretend there is no minimum wage and you could work for less than $7.90
  7. 7. Graph workers on board • Jumping jacks market
  8. 8. Law of Supply • As the price of a good increases, producers will produce more (,or try to) quantity. As the price of the good decreases, producers will produce less quantity. P Qs and P Qs The supply curve is always upward sloping $ Q S
  9. 9. For example…. • Average prices of • Therefore…..
  10. 10. Graph one: A Supply Curve Price of Widgets Number of Widgets Sellers Want to Sell $1.00 10 $2.00 40 $3.00 70 $4.00 140
  11. 11. Producer Surplus • Difference between cost and sale price • IOW: profit • Sale: $15 • Cost: $10 • PS = $5
  12. 12. For example….
  13. 13. In your groups • Choose either a computer company or a car company • Your boss wants your group to figure out how to produce MORE of your goods per year • Consider every factor of production (land, labor, capital)
  14. 14. If price changes Q*supply, What changes supply?
  15. 15. 4 Determinants of Supply • Price of production + or – • Resources • Taxes • regulation
  16. 16. 4 Determinants of Supply • Expectations of future price • If future P$ might rise, hold inventory • If future P$ might fall, increase supply
  17. 17. 4 Determinants of Supply • Sellers (increase or decrease)
  18. 18. 4 Determinants of Supply • Technology
  19. 19. 4 Determinants of Supply Mnemonic • Price of Production • Expectations • Sellers (#) • Technology •PEST = supply determinants •TRIBE = demand determinants
  20. 20. PEST Changes Assignment With 1 partner, see #2 1. For each part of PEST, identify one positive and negative change to the car or computer market and sketch a correctly drawn graph 2. Find an article either on your phone or in a financial magazine, write the headline, the market, part of PEST that is changing and graph it.
  21. 21. BR Full sheet 1. How many pairs of flip flops do you own? 2. What price did you or your parents pay for your favorites? (estimate if you don’t remember) (If you don’t own a pair, explain why)
  22. 22. Now we will learn where prices come from
  23. 23. Trading Game • Flip flops • Buyers maximize consumer surplus • Sellers maximize producer surplus • Whole $1 prices • Top 2 players get 5 Quantitative Easing points
  24. 24. Supply/Demand game Closure 5. What happened to the equilibrium price in the different rounds? 6. How would the price have changed if we doubled the number of buyers? 7. How would the price have changed if we doubled the number of sellers? 8. Did you like being a buyer or seller more, explain why?
  25. 25. White boards: Bellringer 1. Which words would you associate with demand? 2. Which words would you associate with supply?
  26. 26. Diff between supply and Demand Xbox 360 games • Supply or demand change? • Determinant released
  27. 27. Diff between supply and Demand Wheat • Supply or demand change? • Determinant Locusts Infest Kansas
  28. 28. Diff between supply and Demand Mexican food • Supply or demand change? • Determinant
  29. 29. Diff between supply and Demand airline tickets • Supply or demand change? • Determinant
  30. 30. Diff between supply and Demand gasoline • Supply or demand change? • Determinant
  31. 31. Diff between supply and Demand Demand increases, decreases or no change Market: New Cars Change: US government increases income tax rates
  32. 32. Diff between supply and Demand Market: New Cars Change: Price of steel decreases 15 %
  33. 33. Diff between supply and Demand Market: New Cars Change: population of US increases by 6 %
  34. 34. Diff between supply and Demand Market: New Cars Change: US media reports next year’s car models will be more expensive due to environmental laws
  35. 35. Diff between supply and Demand Market: New Cars Change: gasoline prices increase to over $4 gallon
  36. 36. Diff between supply and Demand Market: Sun Tran bus rides Change: Average Tucson gets a 2% raise
  37. 37. Diff between supply and Demand Market: Sun Tran bus rides Change: Population of Tucson decreases for fifth straight year
  38. 38. Diff between supply and Demand Market: Sun Tran bus rides Change: Gasoline prices increase to 4%
  39. 39. Diff between supply and Demand Market: Smart phone apps Change: prices of new apps decreasing due to advertisements
  40. 40. Diff between supply and Demand Market: Smart phone apps Change: New iphone released
  41. 41. Diff between supply and Demand Market: Smart phone apps Change: Consumers think apps will no longer be free starting May 1
  42. 42. Diff between supply and Demand Red Roses Market: red roses Change: prices of chocolate decreases
  43. 43. Diff between supply and Demand Red Roses Market: red roses Change: cost of fertilizer increases
  44. 44. Diff between supply and Demand Red Roses Market: red roses Change: Its February 14
  45. 45. Diff between supply and Demand Red Roses Market: red roses Change: Its February 16
  46. 46. Diff between supply and Demand New cars • Supply or demand change? • Determinant
  47. 47. Diff between supply and Demand Used clothing • Supply or demand change? • Determinant
  48. 48. Diff between supply and Demand Dog food • Supply or demand change? • Determinant
  49. 49. Diff between supply and Demand Dog food • Supply or demand change? • Determinant
  50. 50. Diff between supply and Demand Salsa • Supply or demand change? • Determinant
  51. 51. Diff between supply and Demand Salsa • Supply or demand change? • Determinant
  52. 52. Diff between supply and Demand Salsa • Supply or demand change? • Determinant
  53. 53. Diff between supply and Demand Salsa • Supply or demand change? • Determinant
  54. 54. Diff between supply and Demand Spurs Clothing • Supply or demand change? • Determinant
  55. 55. Diff between supply and Demand Spurs Clothing • Supply or demand change? • Determinant
  56. 56. Diff between supply and Demand Office supplies • Supply or demand change? • Determinant
  57. 57. Bellringer 1. Do an OPTIC for this graph 2. Hold onto this for #2 OPTIC
  58. 58. OIL!!!
  59. 59. #2 OPTIC
  60. 60. Oil Drilling Crude oil from ground Sent to refinery
  61. 61. Uses of Oil
  62. 62. 2011 Oil Consumption Rankings (Source: CIA FACTBOOK) Amount (top to bottom) #1 United States: 19,150,000 bl/day #2 : European Union 13,680,000 bl/day #3 China: 9,400,000 bl/day #4 Japan: 4,452,000 bl/day #5 India: 3,182,000 bl/day
  63. 63. #2 OPTIC
  64. 64. solve this problem? • Constant supply of oil, high demand • What to do? Substitutes? • 8 minutes in groups
  65. 65. Corn! • US government provides incentives to grow corn for fuel • Recent regulation has caused corn prices to increase since 2000 • If you were a farmer, what would you do?

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