Substitutes income effect

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Substitutes income effect

  1. 1. Bellringer Think back to your business idea from entrepreneurship week. 1. What was your entrepreneurial idea? 2. Who are your customers? (income?, age?, gender? Culture? Lifestyle?) 3. How often do they buy your goods/services in a day, month, year etc? 4. Are there any other products that people would buy along with your products?
  2. 2. Changes to demand Does Demand change when the price of a good changes? Only the Quantity demanded changes with price Review: What is the Q*D at Price = $1.50? When Q*D is at 50, what is the price?
  3. 3. #5 O P T I C
  4. 4. Demand Vocab  “complements” – a good that is purchased with another  “substitutes” – a good which can be substituted for another  Substitution effect - Changes to prices of similar goods changes people’s demand  Normal goods – goods you buy more of when your income increases  Inferior goods – goods you buy less of when your income increases  Income Effect – changes to a person’s income changes their demand
  5. 5. Why is this important for firms?
  6. 6. What sorts of goods are these? Others? Compliments? Normal/Inferior?
  7. 7. Cultural?  Preferences change  South Korea >>>>>
  8. 8. At your tables 6. When would be a good time to sell normal goods? (when the economy is….?) 7. When would be a good time to sell inferior goods? (when the economy is…..?) 8. List two complements for ground beef 9. List two substitutes for ground beef
  9. 9. Determinants of Demand  Causes that will change Demand
  10. 10. Determinants of Demand  Changes to tastes and preferences
  11. 11. Determinants of Demand  Availability and price of substitute goods
  12. 12. Determinants of Demand  Availability and price of complements
  13. 13. Determinants of Demand  Changes to income
  14. 14. Determinants of Demand  Changes to population
  15. 15. Determinants of Demand  Expectations of future price
  16. 16. A trick to remember determinants of demand T R I B E T = tastes of consumers R = Related goods (P$ change) I = Income of buyers B = # of buyers E = expectations of future price http://quizlet.com/2043838/individual-markets-flash-cards/
  17. 17. Demand Curve Experiment 1. Conduct a demand curve experiment 2. Choose 1 good (snickers bars, monster drinks, movie tickets, takis bags, AZ ice tea, “5” packs of gum or Hershey bars) 3. Make up 5 price points and a time period 4. Survey 5 people and find out their demand per week (write their names) 5. Graph the total demand on a correctly labeled graph 6. Write an explanation of how the experiment shows the law of demand in action AND how a company might use this information
  18. 18. BR Which part of TRIBE will change in the following scenarios to the Tucson movie theater market? 1. Average wage in Tucson increases 2. Price of DVDs & flat screen TVs decrease 3. Population of Tucson doubles 4. New Brad Pitt & J-Lo movie comes out 5. KOLD reports movie tickets will increase 15% in 2014 6. Xbox1 & PS4 hit the stores
  19. 19. Quantity $ Graphically speaking… Demand of movie tickets D* A RAISE!!!! A Child!!!! D after raise
  20. 20. On a separate sheet of paper  Graphically sketch the changes to the demand curve Identify the part of TRIBE Label your graphs 1. New residents move to Arizona (houses) 2. Unemployment rises (steak) 3. The price of buns increases (hot dogs) 4. The internet gets more expensive (itunes mp3’s) 5. Unemployment rises (studio apartments) 6. You go to college (text books) 7. Average income rises (Hawaiian vacations) 8. Average income rises (used clothing) 9. The price of meat increases (A1 steak sauce) 10. Eegees releases a brand new flavor (slushies) 11. Gas prices increase to $6.50/gallon (bicycles) 12. Dept of Labor reports college grads earn more $$ (college degrees) 13. You read an article that gas prices will triple in October (gas) 14. Make up your own example and show demand shift $ Q
  21. 21. On a separate sheet of paper  Graphically sketch the changes to the demand curve Identify the part of TRIBE Label your graphs 1. New residents move to Arizona (houses) 2. Unemployment rises (steak) 3. The price of buns increases (hot dogs) 4. The internet gets more expensive (itunes mp3’s) 5. Unemployment rises (studio apartments) 6. You go to college (text books) 7. Average income rises (Hawaiian vacations) 8. Average income rises (used clothing) 9. The price of meat increases (A1 steak sauce) 10. Eegees releases a brand new flavor (slushies) 11. Gas prices increase to $6.50/gallon (bicycles) 12. Dept of Labor reports college grads earn more $$ (college degrees) 13. You read an article that gas prices will triple in October (gas) 14. Make up your own example and show demand shift $ Q
  22. 22. On a separate sheet of paper  Graphically sketch the changes to the demand curve Identify the part of TRIBE Label your graphs 1. New residents move to Arizona (houses) 2. Unemployment rises (steak) 3. The price of buns increases (hot dogs) 4. The internet gets more expensive (itunes mp3’s) 5. Unemployment rises (studio apartments) 6. You go to college (text books) 7. Average income rises (Hawaiian vacations) 8. Average income rises (used clothing) 9. The price of meat increases (A1 steak sauce) 10. Eegees releases a brand new flavor (slushies) 11. Gas prices increase to $6.50/gallon (bicycles) 12. Dept of Labor reports college grads earn more $$ (college degrees) 13. You read an article that gas prices will triple in October (gas) 14. Make up your own example and show demand shift $ Q
  23. 23. On a separate sheet of paper  Graphically sketch the changes to the demand curve Identify the part of TRIBE Label your graphs 1. New residents move to Arizona (houses) 2. Unemployment rises (steak) 3. The price of buns increases (hot dogs) 4. The internet gets more expensive (itunes mp3’s) 5. Unemployment rises (studio apartments) 6. You go to college (text books) 7. Average income rises (Hawaiian vacations) 8. Average income rises (used clothing) 9. The price of meat increases (A1 steak sauce) 10. Eegees releases a brand new flavor (slushies) 11. Gas prices increase to $6.50/gallon (bicycles) 12. Dept of Labor reports college grads earn more $$ (college degrees) 13. You read an article that gas prices will triple in October (gas) 14. Make up your own example and show demand shift $ Q
  24. 24. On a separate sheet of paper  Graphically sketch the changes to the demand curve Identify the part of TRIBE Label your graphs 1. New residents move to Arizona (houses) 2. Unemployment rises (steak) 3. The price of buns increases (hot dogs) 4. The internet gets more expensive (itunes mp3’s) 5. Unemployment rises (studio apartments) 6. You go to college (text books) 7. Average income rises (Hawaiian vacations) 8. Average income rises (used clothing) 9. The price of meat increases (A1 steak sauce) 10. Eegees releases a brand new flavor (slushies) 11. Gas prices increase to $6.50/gallon (bicycles) 12. Dept of Labor reports college grads earn more $$ (college degrees) 13. You read an article that gas prices will triple in October (gas) 14. Make up your own example and show demand shift $ Q
  25. 25. On a separate sheet of paper  Graphically sketch the changes to the demand curve Identify the part of TRIBE Label your graphs 1. New residents move to Arizona (houses) 2. Unemployment rises (steak) 3. The price of buns increases (hot dogs) 4. The internet gets more expensive (itunes mp3’s) 5. Unemployment rises (studio apartments) 6. You go to college (text books) 7. Average income rises (Hawaiian vacations) 8. Average income rises (used clothing) 9. The price of meat increases (A1 steak sauce) 10. Eegees releases a brand new flavor (slushies) 11. Gas prices increase to $6.50/gallon (bicycles) 12. Dept of Labor reports college grads earn more $$ (college degrees) 13. You read an article that gas prices will triple in October (gas) 14. Make up your own example and show demand shift $ Q

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