next unit #1 benchmark test 25 questions take out a pencil and clear your desk. 30 minutes
TRANSCRIPT
NEXT
Unit #1 Benchmark TEST
25 questionsTake 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.
SSEMI2You 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?
NEXT7
2 important conditions of Demand
1. People are willing to purchase it
2. People are able to purchase it
$200
NEXT
So what influences YOU to purchase an
item or not?
NEXT
The Price
As the price increases consumers buy less.
P ↑, QD↓
P= PriceQD= Quantity Demanded
As the price decreases consumers buy more.
P ↓, QD↑
NEXT10
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
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
NEXT13
Quantity Demanded to Price
A Demand ScheduleA Demand Schedule
Price ofPrice ofWidgetsWidgets
Number of Number of WidgetsWidgets
People Want to People Want to BuyBuy
$1.00$1.00 100100
$2.00$2.00 9090
$3.00$3.00 7070
$4.00$4.00 4040
NEXT
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
NEXT15
NEXT16
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
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 QuestionIn economics, the amount of a product a consumer is willing and able to buy at various possible prices during a given time is called
SupplyDemandSubstitutionUtility
NEXT
Show What You Know!
Georgia Milestone Practice QuestionIf the price for an item continues to increase what will happen to the quantity demanded
It will fallIt will fluctuateIt will increaseIt will remain the same
NEXT
Show What You Know!
Georgia Milestone Practice QuestionThe quantity of goods that consumers are willing and able to buy at a series of prices can be listed on a demandGraphScheduleCurveLine
NEXT
Show What You Know!
Georgia Milestone Practice QuestionWhen people use their resources so that marginalbenefits exceed marginal costs, theyMake rational economic decisionsMake irrational economic decisionsEliminate the opportunity costs of decisionsFail to use resources efficiently
NEXT
Show What You Know!
Georgia Milestone Practice QuestionWhen people make more money they usuallySave moreSpend more Sell more thingsHave more interest
NEXT23
THE END
Any Questions?Any Questions?Any Questions?Any Questions?Any Questions?Any Questions?Any Questions?
NEXT
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
SSEMI3
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 DemandYou 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 preferencesR-elated Goods Price/Complementary goodsI- ncome M-arket SizeE-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 QuestionWhen economics refer to “demand” they mean which ofthe following?How much satisfaction buyers receive from a purchaseHow much consumers will purchase at different pricesHow much sellers will supply at different pricesHow much people want the product if its free
NEXT
Show What You Know!
Georgia Milestone Practice QuestionWhich of the following is an attempt by a firm to increase the demand for its product?the imposition of a price ceiling on the productan advertising strategy designed to change consumer tastes and preferencesa marketing strategy to make the good scarce and therefore more expensivea production strategy to flood the market with the good or service
NEXT
Show What You Know!
Georgia Milestone Practice QuestionThe principle that producers will only produce goods thatwill yield them a profit because it is somethingconsumers want is known as the:Law of diminishing marginal utilityLaw of demandEquity pricePrice elasticity
NEXT
Closure Activity #9
Worksheet 5AWorksheet 5BWorksheet 5C
Determinants of Demand Worksheet
NEXT44
THE END
Any Questions?Any Questions?Any Questions?Any Questions?Any Questions?Any Questions?Any Questions?
NEXT
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
SSEMI3c
c. Define price elasticity of demand and 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
SSEMI3c
c. Define price elasticity of demand and supply.
NEXT
Elasticity of DemandKEY 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 substitutes2. proportion of income spent on good
or service3. 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 CONCEPTSTotal 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 TestEXAMPLE: 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
QuantityDemanded
Total Revenue
($)
$13 1500 19,500
$11 2000 22,000
$9 8000 72,000
$6 11000 66,000
$4 17000 68,000
NEXT
Closure Activity #10Complete the Total Revenue Table and determine if
the item is elastic or inelastic.
Price of Greebes Quantity Demanded Total Revenue($)
$20 295
$18 300
$16 325
$12 375
$9 400
Circle one Elastic Inelastic
NEXT
Show What You Know!
Georgia Milestone Practice QuestionIf the price of milk increases slightly, the demand for milkwill NOT change very much. This market situation is anexample ofDemand elasticityDemand inelasticitySupply elasticitySupply inelasticity
NEXT
Show What You Know!
Georgia Milestone Practice QuestionIf the price of new cars decreases slightly, the demand fornew cars is likely to increase greatly. This marketsituation is an example of Demand elasticityDemand inelasticitySupply elasticitySupply inelasticity
NEXT65
THE END
Any Questions?Any Questions?Any Questions?Any Questions?Any Questions?Any Questions?Any Questions?
NEXT
Chapter 4 TEST Tomorrow!!
DemandLaw of demandDemand scheduleDeterminant of DemandDemand curveMarket demand curveLaw of diminishing marginal utilityIncome effectSubstitution effect
Normal goodsInferior goodsSubstitutesComplementsElasticity of demandElasticInelasticTotal revenue testPurchasing Power **Be able to shift the demand curve left or right.