Wed., 11/12Wed., 11/12

Think back to Think back to Halloween!Halloween!

What was the What was the priceprice of Halloween candy on of Halloween candy on November 1November 1stst, compared to the afternoon of , compared to the afternoon of October 31October 31stst??

What is the What is the needneed for Halloween candy on for Halloween candy on November 1November 1stst, compared, comparedto the afternoon of October 31to the afternoon of October 31stst??

Supply and Supply and DemandDemandGraphing, Notes, and Lots and Lots Graphing, Notes, and Lots and Lots of Practice!!!of Practice!!!

The Basic Graph The Basic Graph (aka “The Starting (aka “The Starting Point”)Point”)

What do the letters What do the letters mean?mean?

X axis = Q = X axis = Q = Quantity Quantity

Y axis = P = Y axis = P = PricePrice

D = D = DemandDemand

S = S = SupplySupply

The Basic Graph The Basic Graph (aka “The Starting (aka “The Starting Point”)Point”)

Equilibrium

What do the letters What do the letters mean?mean?

““The Intersection” = The Intersection” = EquilibriumEquilibrium (shows (shows perfect supply/demand)perfect supply/demand)

Q* = Q* = Quantity Demanded/Supplied (at Quantity Demanded/Supplied (at the equilibrium price) the equilibrium price)

P* = P* = Equilibrium Price Equilibrium Price

Definition for SupplyDefinition for Supply

The The total amounttotal amount of a good or of a good or service producers are willing service producers are willing and able to make at all and able to make at all pricesprices at a specific point in time.at a specific point in time.

Law of Supply Law of Supply (movement)(movement)

States that as the price States that as the price increases (or decreases)increases (or decreases) the the quantity suppliedquantity supplied also also increases (or decreases).increases (or decreases).

or

DeterminantsDeterminants - things that - things that could could shiftshift (change) the (change) the SUPPLY of a productSUPPLY of a product

Price and availability of land, Price and availability of land, labor and capital labor and capital (OJ v. cold winter)(OJ v. cold winter)

New technology New technology (cotton gin)(cotton gin)

Number of other sellers Number of other sellers (grocery (grocery stores in M’town)stores in M’town)

DeterminantsDeterminants – things that – things that could could shiftshift (change) the (change) the SUPPLY of a product, cont.SUPPLY of a product, cont.

Price of other goods someone Price of other goods someone could produce could produce (fresh fruits and/or (fresh fruits and/or vegetables in the summer v. winter)vegetables in the summer v. winter)

Taxes Taxes (if they increase overall cost (if they increase overall cost goes up too)goes up too)

Graphing a Graphing a ShiftShift in Supply in Supply(start w/ the basic graph)(start w/ the basic graph)

S2

S2

Graphing a Graphing a ShiftShift in in Supply Supply

The NEW supply line (S2) is The NEW supply line (S2) is called the called the Supply CurveSupply Curve..

That’s CrazyThat’s Crazy – it’s – it’s aa straight line! (don’t straight line! (don’t let that throw you off) let that throw you off)

Graphing a Graphing a ShiftShift in Supply in Supply (show the new (show the new price/quantity)price/quantity)

S2

P2

Q2

Definitions for DemandDefinitions for Demand

The The total amounttotal amount consumers consumers are willing and able to buy at are willing and able to buy at all prices at a specific point in all prices at a specific point in time.time.

Law of DemandLaw of Demand (movement)(movement)

States that as the price States that as the price increases (or decreases) the increases (or decreases) the quantity demandedquantity demanded decreases (or increases).decreases (or increases).

or

DeterminantsDeterminants - things that - things that could could shiftshift (change) the (change) the DEMAND for a productDEMAND for a product

Tastes and fads Tastes and fads (Q’back jerseys)(Q’back jerseys)

Income Income (BMW dealerships in area)(BMW dealerships in area)

Number of buyers Number of buyers (Burger King)(Burger King)

DeterminantsDeterminants - things that - things that could could shiftshift (change) the (change) the DEMAND for a product, DEMAND for a product, cont.cont.

Future price expectations Future price expectations (SUVs - when gas increases)(SUVs - when gas increases)

Price and availability ofPrice and availability ofSubstitutes Substitutes (“Uggs” v. “Fuggs”)(“Uggs” v. “Fuggs”)

Compliments Compliments (jam/jelly w/ PB)(jam/jelly w/ PB)

Graphing a Graphing a ShiftShift in Demand in Demand(start w/ the basic graph)(start w/ the basic graph)

D2

D2

Graphing a Graphing a ShiftShift in in Demand Demand

The NEW Demand line is called the The NEW Demand line is called the Demand CurveDemand Curve..

That’s Right Folks That’s Right Folks – – it’s also a straight line! it’s also a straight line!

Graphing a Graphing a ShiftShift in Demand in Demand (show the new (show the new price/quantity)price/quantity)

P2

Q2

D2

I R D LI R D LAlways remember it so you know Always remember it so you know whether to shift right or leftwhether to shift right or left(for either supply or demand). . .(for either supply or demand). . .

I R D LI R D L stands for stands for . . . . . .

IIncreasencreaseRRightightDDecreaseecreaseLLefteft

Let’s Try Let’s Try It!It!

Imagine you are reading a Imagine you are reading a newspaper and come across the newspaper and come across the

following headlines . . .following headlines . . .

Two Major Two Major Computer Computer

Manufacturers Manufacturers Build Five New Build Five New

FactoriesFactories

You always want to You always want to ask the ask the same series of same series of questionsquestions to help you to help you

understand the understand the information that you information that you

will be graphing.will be graphing.

Two Major Computer Two Major Computer Manufacturers Build Five New Manufacturers Build Five New

FactoriesFactories What is the market you are graphing?What is the market you are graphing? ComputersComputers Does it deal with Supply or Demand?Does it deal with Supply or Demand? SupplySupply Does supply increase or decrease?Does supply increase or decrease? IncreaseIncrease Does the supply curve shift to the right or left?Does the supply curve shift to the right or left? RightRight

SupplySupply of computers of computers increasesincreases because more because more factories are built.factories are built.

P2

Q2

S2

Doctors announce Doctors announce benefits of eating ice benefits of eating ice

cream dailycream daily

Try AnotherTry Another

Doctors announce the benefits of Doctors announce the benefits of eating ice cream dailyeating ice cream daily

What is the market you are graphing?What is the market you are graphing? Ice CreamIce Cream Does it deal with Supply or Demand?Does it deal with Supply or Demand? DemandDemand Does demand increase or decrease?Does demand increase or decrease? IncreaseIncrease Does the demand curve shift to the right or Does the demand curve shift to the right or

left?left? RightRight

DemandDemand for ice cream for ice cream increasesincreases for health reasons for health reasons

P2

Q2

D2

Car Manufacturer Car Manufacturer Announces Plans for Announces Plans for SUV Price Increase in SUV Price Increase in

Two MonthsTwo Months

Here’s a Tricky OneHere’s a Tricky One

Don’t forget to ask the Don’t forget to ask the questions . . . questions . . .

What is the market you are graphing?What is the market you are graphing? Does it deal with Supply or Demand?Does it deal with Supply or Demand? Does supply/demand increase or Does supply/demand increase or

decrease?decrease? Does the supply/demand curve shift to Does the supply/demand curve shift to

the right or left?the right or left?

Demand for SUVs NOW!Demand for SUVs NOW!

P2

Q2

D2

Always read the Always read the headline for what headline for what it is it is right nowright now!!

Try not to read into it too much! Try not to read into it too much! Keep it simple!Keep it simple!

Smart Board GraphingSmart Board Graphing

Closer – 11/12

Answer the following question in complete

sentences:

What is the incentive for you to behave and study in your classes?

Toyota unveils new car that gets 97 mpg!

Don’t forget to ask the questions!

• What is the market you are graphing?

• Does it deal with Supply or Demand?

• Does supply increase or decrease?

• Does the supply curve shift to the right or left?

Demand increases for Toyotas with great gas mileage

P2

Q2

D2

Protected Owls Discovered in Lumber

Forest! Companies told to

discontinue logging.

Don’t forget to ask the questions!

• What is the market you are graphing?

• Does it deal with Supply or Demand?

• Does supply increase or decrease?

• Does the supply curve shift to the right or left?

Supply of lumber (logging) decreases due to protection of owls

S2

P2

Q2