Goal 8 supply and demand changes


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Goal 8 supply and demand changes

  1. 1. Laws of Demand<br />Goal 8<br />
  2. 2. Discuss<br />What is a market?<br />In a market who is the consumer?<br />How does the price of a good affect the consumer?<br />
  3. 3. Market<br />An arrangement that allows buyers and sellers to exchange things<br />Markets exist because no one is self sufficient and no one produces all we require to satisfy all our needs and wants.<br />
  4. 4. Demand<br />Description<br />The quantities of a particular good or service consumers are willing and able to buy at different possible prices at a particular time<br />
  5. 5. Demand Illustration p.1 sec. 1<br />As price goes up, quantity demanded goes down<br />Price<br />D1<br />Quantity<br />
  6. 6. Discuss<br />How does demand and “want” or “desire” differ?<br />You may want or desire a new car or a closet full of clothes, but you demand these things only when you are willing and able to buy them.<br />
  7. 7. Quantity Demand<br />The quantities of a particular good or service consumers are willing and able to buy at set prices at a particular time<br />
  8. 8. Quantity Demand Illustration<br />Price<br />D2<br />Quantity<br />
  9. 9. Demand Schedule<br />How much people are going to buy at the various prices.<br />Ex. The price of pizza<br />Price<br />Quantity<br />$.50<br />$1.00<br />$1.50<br />$2.00<br />$2.50<br />
  10. 10. Law of Demand<br />As price goes up quantity goes down<br />As price goes down quantity goes up<br />People buy less of something at higher prices than they do at lower prices.<br />
  11. 11. ELASTIC DEMAND:<br />demand that is very sensitive to a change in price<br />goods that one might stop buying or cut back on as price increased (SUVs, Luxury items)**on a graph this demand curve will be FLAT<br />
  12. 12. INELASTIC DEMAND<br />demand that is not very sensitive to a change in price<br /> goods that you would buy at any price; there are few if any substitutes for these goods. <br />(milk, gas, prescription drugs) **on a graph this demand curve would be very steep.<br />
  13. 13. Illustration of Decrease and Increase in Demand<br />Decrease in Price<br />Increase in Price<br />Price<br />Price<br />D2<br />D1<br />D2<br />D1<br />Quantity<br />Quantity<br />The less you buy the more you will move to the left!<br />
  14. 14. The Demand Curve<br />The Demand Curve slopes downward to the right because the consumer is willing and able to buy more gasoline at lower prices than at higher prices.<br />
  15. 15. Scenario #1<br />Harris Teeter is advertising a sale on hot dog buns. What is the impact on the demand for hot dogs?<br />
  16. 16. Scenario #2<br />Playstation 3, the newest video game console, hits stores. What is the impact on the demand for Xbox 360?<br />
  17. 17. Scenario #3<br />The weatherman forecasts rain for the weekend in Charlotte. What is the impact on the demand for umbrellas?<br />
  18. 18. Scenario #4<br />The N.C. General Assembly increases minimum wage to $7/hour. What is the impact on the demand for clothing?<br />
  19. 19. Scenario #5<br />A snowy blizzard blows through Charlotte. What is the impact on the demand for snow boots?<br />
  20. 20. Scenario #6<br />The price of MP3 players decreases dramatically due to new technology. What is the impact on the demand for portable CD players?<br />
  21. 21. Scenario #7<br />Summertime is approaching. What is the impact on the demand for shorts?<br />
  22. 22. Scenario #8<br />The price of hamburgers increases at Food Lion. What is the impact on the demand for French fries?<br />
  23. 23. Changes in Demand<br />
  24. 24. Reasons Demand can change<br />People’s Income<br />Weather<br />Complementary Goods<br />Substitute Goods <br />
  25. 25. What is a Complementary Good? <br />Complementary Good: Two goods that are usually consumed together (Hot Dogs & buns)<br />
  26. 26. What is a Substitute Good? <br />Substitute Good: An acceptable replacement for a good (Playstation & Xbox)<br />
  27. 27. People’s Income Increases<br />P<br />Effect on Demand<br />Demand Increases<br />(shift right)<br />D1<br />D2<br />Q<br />
  28. 28. Bad Weather (for product)<br />Effect on Demand<br />Demand Decreases<br />(shift left)<br />P<br />D1<br />D2<br />Q<br />
  29. 29. Price of Complementary Good Decreases (ex: peanut butter & jelly)<br />P<br />Effect on Demand<br />Demand Increases<br />(shift right)<br />D1<br />D2<br />Q<br />Peanut Butter<br />
  30. 30. Price of Substitute Good Decreases (ex: Pepsi & Coca-Cola)<br />P<br />Effect on Demand<br />Demand Decreases<br />(shift left)<br />D1<br />D2<br />Q<br />Pepsi<br />
  31. 31. Complementary vs. Substitute<br />Can YOU tell the difference????<br />
  32. 32. Substitute<br />
  33. 33. Complementary<br />
  34. 34. Substitute<br />
  35. 35. Complementary<br />
  36. 36. Substitute<br />
  37. 37. Substitute<br />
  38. 38. Complementary<br />
  39. 39. Elasticity of Demand<br />How much the quantity demanded will change if the price rises or falls.<br />
  40. 40. Supply<br />
  41. 41. Discuss<br />Now you are the producer<br />Think about the business you are creating<br />Things are now going to reverse<br />
  42. 42. Supply<br />Description<br />The quantity of goods a producer is willing and able to sell at various prices at a particular time.<br />P<br />S1<br />Q<br />
  43. 43. Quantity Supplied<br />The quantity of goods a producer is willing and able to sell at a set price at a particular time.<br />P<br />S1<br />Q<br />
  44. 44. Supply Schedule<br />A list of quantities supplied by a provider at certain prices<br />Price<br />Quantity<br />$.50<br />1<br />$1.00<br />2<br />$1.50<br />3<br />$2.00<br />4<br />$2.50<br />5<br />
  45. 45. Law of Supply<br />As price goes up, quantity goes up<br />As price goes down, quantity goes down<br />More items will be offered for sale at a higher price than at a lower price<br />
  46. 46. Illustrate an Increase in Supply<br />Price<br />S1<br />S2<br />Quantity<br />
  47. 47. Illustrate a Decrease in Supply<br />Price<br />S2<br />S1<br />Quantity<br />
  48. 48. Supply Curve<br />The Supply Curve slopes upward and to the right because the producer is willing and able to sell more products at higher prices than at lower prices.<br />
  49. 49. Change in Supply<br />
  50. 50. Reasons for change in Supply <br />Cost of Inputs<br />Number of Suppliers<br />Weather<br />
  51. 51. Costs of Inputs Decrease<br />Effect on Supply<br />Supply Increases<br />(shift right)<br />Spending less to run the business<br />Examples<br />Land<br />Labor<br />Capital<br />P<br />S1<br />S2<br />Q<br />
  52. 52. Number of Suppliers Increases<br />Effect on Supply<br />Supply Increases<br />(shift right)<br />Example: Basketballs<br />Dicks Sporting Goods<br />Sports Authority<br />Footlocker<br />P<br />S1<br />S2<br />Q<br />
  53. 53. Weather is bad for product<br />S2<br />Effect on Supply<br />Supply Decreases<br />(shift left)<br />Example<br />A hurricane during the orange growing season<br />P<br />S1<br />Q<br />
  54. 54. SO… can you apply this knowledge?<br />1) Together lets decide if the following scenarios are a change in…<br />Input costs<br />Number of suppliers<br />Weather<br />2) Then decide if it will<br />Increase supply<br />Decrease Supply<br />
  55. 55. Situation #1<br />Dick’s Sporting Goods goes out of business. What is the impact on basketballs in Charlotte?<br />-number of suppliers changes<br />-Supply Decreases<br />
  56. 56. Situation #2<br />A hurricane destroys the orange groves in Florida. What is the impact on the supply of Orange Juice?<br />-weather changes<br />-Supply Decreases<br />
  57. 57. Situation #3<br />The price of gas decreases. What is the impact of trucking companies?<br />-cost of inputs change<br />-Supply Increase<br />
  58. 58. Situation #4<br />Nike moves their factory from the U.S. to China where workers are paid less. What is the impact on the supply of Nike’s shoes?<br />-change in input costs<br />-Supply Increases<br />
  59. 59. Supply and Demand together<br />
  60. 60. Equilibrium: the point at which quantity demanded and quantity supplied are equal<br />
  61. 61. At a point of equilibrium….<br />the price and quantity are balanced<br />the market for a good/service is stable<br />
  62. 62. Disequilibrium: any price or quantity not at equilibrium<br />
  63. 63. Excess Demand: when quantity demanded is more than quantity supplied<br />aka SHORTAGE!!!!<br />shortage<br />
  64. 64. Excess Supply: when quantity supplied is more than quantity demanded<br />aka SURPLUS!!!!<br /> surplus<br />
  65. 65. A shift in the demand curve or the supply curve will result in a new equilibrium price.<br />
  66. 66. Government Intervention in a Market Economy<br />Price Ceiling: a maximum price that can be legally charged for a good or service <br />(example: rent control)<br /> Price Floor: a minimum price for a good or service<br />(example: minimum wage)<br />
  67. 67. Inflation and Deflation<br /> Inflation: a general increase in prices (over the years, prices rise and fall, but in the American economy, they have mostly risen)<br /> Deflation: A substantial drop in the prices<br />