Tutorial 2

Supply and

demand

Learning IntentionTo understand the concept of supply and demand using practical examples.

I can:

- identify examples of supply and demand.

- define key terms relating to supply and demand.

- use the skeleton island activity to explain supply and demand.

- understand Stage 1 taskcards for Unit 1.

Success Criteria

Average NBA player wage: $4.9 millionLeBron James’ Wage: $24 million

Price of a kilogram of gravel = $55Price per kilogram for a diamond = $1

million

2002 Holden Monaro = $20,0001971 Holden Monaro = $150,000

Why????

Supply and demand theoryThe supply or demand for a good affects its price. If a product has a low price, usually more people are prepared to buy it.

DEMAND: If an iPad cost $5, most of us would probably buy one. Low prices usually increases the demand.

If ballpoint pens cost $50 each, most of us would use pencils and not purchase pens. High prices usually decrease the demand.

Supply and demand theorySUPPLY: The supply of a good is affected by what it cost to make it. No business would want to sell an iPad for $5 because they would not make any money off it, in fact they would probably lose money!

So a business decides a price that it will make a profit (or break even) when selling that product.

Supply and demand theoryThere is a good balance in an economy when:

- there are enough goods supplied to meet

consumer demand.

- all suppliers make a reasonable profit.

- consumers consider goods to be value for

money.

Fun FactLong ago, when houses made of wood were first being built, nails were very expensive. Each nail had to be made by hand, pounded into shape by a blacksmith. Though it wasn't difficult, it took time. Even a good blacksmith wouldn't be able to make more than a few hundred nails in an entire day.

Nowadays, there are machines that can manufacture thousands of nails an hour. Because they are so much easier to acquire now, or because there is a greater supply of nails, the price has dropped substantially.

AFL Finals: Case study

The prices of flights from Perth to Melbourne during Grand Final week went up once the West

Coast Eagles made the 2015 AFl Grand Final.

Why do you think this occurred?

http://www.dailymail.co.uk/news/article-3250663/AFL-fans-relieved-Virgin-adds-flights-Perth-Melbourne-year-s-grand-final-cost-ticket-London.html

http://www.abc.net.au/news/2015-09-28/west-coast-eagles-fans-race-to-reach-mcg-for-afl-grand-final/6811040

CASE STUDY 2

https://www.youtube.com/watch?v=TwSB779gX4c&hd=0

This video shows a scenario at a Wedding dress sale.

Describe how this relates to supply and demand?

Why does Monica (main character) act the way that she does?

Example 3: Cyclone

LarryIn 2006, Cyclone Larry tore through North Queensland

destroying Australia’s banana crops. The 300km/h winds led to

the destruction of 80% of Australia’s banana supplies, with estimates putting the damage to the crops at around $400 million.

Banana prices increased from $3/kilo to over $12/kilo after

Cyclone Larry. With a shortage of Australian grown bananas, prices stayed high for over a

year!

Watch: Supply and Demand Explained

https://www.youtube.com/watch?v=RP0j3Lnlazs

Define

Supply:

Demand:

Surplus:

Shortage:

Define:Supply: How much the market can offer. The quantity supplied refers to the amount

of a certain good producers are willing to supply when receiving the correct price.

Demand: How much (quantity) of a good or service is desired by buyers.

Surplus: An amount of something left over when requirements have been met; an

excess of production or supply.

Shortage: A situation in which something needed cannot be obtained in

sufficient amounts.

Skeleton Island Game

Taskcard time

look at the Humanities taskcards and choose

one that suits your level.