•Review HW Review HW (Section Reviews)(Section Reviews)•Chapter 2 QuizChapter 2 Quiz•QOD #8: High Priced AthletesQOD #8: High Priced Athletes•Law of Demand (Graph it!)Law of Demand (Graph it!)•Demand CurvesDemand Curves•Diminishing Marginal Utility & Diminishing Marginal Utility & ApplesApples•HW :HW :Looking for Supply & Demand Part 1Part 1

Ch 3, Section 1 Review pg 70 #1 a-j, 3, Ch 3, Section 1 Review pg 70 #1 a-j, 3, 4, 5, 74, 5, 7

AGENDA Tues 1/31 & Wed 2/1

• Fans often complain that athletes get paid too much money and that these higher salaries lead to higher ticket prices.1.1. Do you agree or disagree with this statement?Do you agree or disagree with this statement?• Higher ticket prices lead to lower sales. Higher ticket prices lead to lower sales. 2.2. Why does this happen?Why does this happen?3.3. Why would they raise ticket prices?Why would they raise ticket prices?

• If the Lakers sell 20,000 tickets at $25 and only sell 12,000 at $30, which ticket price brings in more total revenue?

• If players salaries go up from $300,000 to $325,000 per game what price would you sell your tickets at? The attendance numbers from above still apply.

• What do you think might cause ticket prices to go up?

demand refers to the buying side supply refers to the selling side

markets are places where people come together to buy and sell goods or services

ex: swap meet, stock market, grocery store, E-Baygood is a tangible item [product] that gives a

person utility or satisfaction Utility: something that is useful or designed for use

service is an intangible item that gives a person utility or satisfaction

Demand- is the willingness and ability to purchase a good or service.willingness to purchase refers to a person’s want or

desire for a goodability to purchase means having the money to pay for

the good.

You may want something but may not have the ability to pay for it.

There is no demand unless BOTH components are there.

Law of Demand as the price (P) of a good increases, the

quantity demanded (QD) of the good decreases as the price of a good decreases, the quantity

demanded increases Inverse Relationship between P and QD

Quantity Demanded (QD) the number of units of a good purchased at a

specific price

Law of Demand

(where P = price and QD = quantity demanded

If P then QD

If P then QD

Quantity demanded - refers to the number of units of a good purchased at a specific price. (It is always a number.)

See example on pg 67

A demand schedule a numerical chart that illustrates the law of demand

A demand curve is graphic representation of the law of demand is a graphic plotting of various price-quantity

comparisons

The law of diminishing marginal utility The law of diminishing marginal utility (satisfaction)(satisfaction) says that as a person says that as a person consumes additional units of a good that consumes additional units of a good that eventually the utility (satisfaction) eventually the utility (satisfaction) gained from each additional unit of the gained from each additional unit of the good decreases.good decreases.

You get more utility (satisfaction) from You get more utility (satisfaction) from the first Chipotle burrito that you eat the first Chipotle burrito that you eat then you do from the 2then you do from the 2ndnd, 3, 3rdrd, and 4, and 4thth burrito that you eat.burrito that you eat.

As goods consumed increased the usefulness of that good decreases.

Is your fifth Chipotle burrito as useful as your first?

or?

The more satisfaction (utility) you receive from a unit of good the higher price you are willing to pay for it.

The less satisfaction (utility) you receive from a unit of good the lower price you will pay for it.

How much will you pay for that 1st Chipotle burrito?

2nd? 3rd? 4th?

caveat emptor: let the buyer beware – the buyer has the duty:1.to make informed decisions2.to inspect the product3.to make payments as contracted

Buyers have the responsibility to become informed about the goods they buy.

Once a buyer agrees to purchase a good, he has the ethical responsibility to pay the seller the agreed-upon price.

After completing your handouts… Create a chart and graph for your own item.

Create a value for the first item through the sixth.

Once you’ve created your own table and chart answer these questions: What would have to change to make your What would have to change to make your

demand of the item change (Other than price, demand of the item change (Other than price, because price only changes the quantity or because price only changes the quantity or amount)?amount)?

Write a short paragraph describing your graph Write a short paragraph describing your graph and chart. Why is the sixth item worth less than and chart. Why is the sixth item worth less than the first? Why did you choose the values that you the first? Why did you choose the values that you did? (in other words put your graph into words).did? (in other words put your graph into words).

Section 1 Review pg 701 a-j, 3, 4, 5, 7

Looking for Supply & Demand Project Part 1