day of test one for demand shifters/determinants (INSECT ...€¦ · Learning target: I can...

Too Dry Tuesday, October 1Where’s the Water? Wednesday, October 2

● Unit 1b test on Monday, 10/7 (A) and Tuesday 10/8 (B); study guide due day of test

● Warm up: From your brains NOT your notes, create two index cards: one for demand shifters/determinants (INSECT) and one for supply shifters/determinants (EATING).

● Learning target: I can describe and graph changes in demand and supply due to determinants/shifters. I show how equilibrium price and quantity change as a result of a shift in demand or supply.

● Homework: 1. 2 USATPs due 10/2; 2. HW 1-6 due 10/3 (A day) or 10/4 (B day); 3. College Board Progress Check due Sunday 10/6 (A) or Monday

10/7 (B)

What Causes a Shift in Demand Curve?● 6 Shifters (Determinants) of Demand:

1. Income of consumers

2. Number of Consumers

3. Substitutes—change in price or availability

4. Expectations for the future price of the product

5. Complements—change in price or availability

6. Tastes and Preferences of the consumer2

1. Population boom 2. Incomes fall due to recession3. Price of tacos, a substitute, decreases4. Price of hamburgers increases to $5 5. New health craze- “No ground beef”6. Hamburger restaurants announce that they will significantly

increase prices NEXT month 7. Price of fries, a complement, increases8. Restaurants lower price of burgers to $.50

Identify the determinant (shifter) then decide if demand will increase or decrease for Hamburgers (a normal good)

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What happens when demand or supply change (i.e., not just Qd or Qs)?

• Increase = moves Right

• Decrease = moves Left

• Meet my friend, IRDL the Turtle:

4

Increase in Demand: Entire curve moves RIGHT

S

Decrease in Demand:Entire curve moves LEFT

S

1. Which of the following will cause the demand for milk to decrease?

A. Increase in the price of a substitute B. A decrease in income assuming that milk is a

normal goodC. A decrease in the price of milkD. An increase in the price of milkE. A decrease in the price of a complementary good

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Practice Questions

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2. Which of the following will cause the quantity demanded of milk to decrease?

A. Increase in the price of a substitute B. A decrease in income assuming that milk is a

normal goodC. A decrease in the price of milkD. An increase in the price of milkE. A decrease in the price of a complementary good

8

Practice Questions

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GRAPHING SUPPLY

Q

$5

4

3

2

1

Price of Milk

Quantity of Milk

Supply Schedule

10 20 30 40 50 60 70 809

PriceQuantitySupplied

$5 50

$4 40

$3 30

$2 20

$1 10

Supply

What if there are new and more productivemilking machines?

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Change in Supply

Q

$5

4

3

2

1

Price of Milk

Quantity of Milk

Supply Schedule

10 20 30 40 50 60 70 8010

Supply S2Price

QuantitySupplied

$5 50 70

$4 40 60

$3 30 50

$2 20 40

$1 10 30

Increase in SupplyPrices didn’t change but

there is MORE milk produced

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Change in Supply

Q

$5

4

3

2

1

Price of Milk

Quantity of Milk

Supply Schedule

10 20 30 40 50 60 70 8011

PriceQuantitySupplied

$5 50

$4 40

$3 30

$2 20

$1 10

Supply

What if the price fordairy cows increases

drastically?

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Change in Supply

Q

$5

4

3

2

1

Price of Milk

Quantity of Milk

Supply Schedule

10 20 30 40 50 60 70 8012

SupplyS2

PriceQuantitySupplied

$5 50 30

$4 40 20

$3 30 10

$2 20 1

$1 10 0

Decrease in SupplyPrices didn’t change but

there is LESS milk produced

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What happens when demand or supply change (i.e., not just Qd or Qs)?

• Increase = moves Right

• Decrease = moves Left

• Meet my friend, IRDL the Turtle:

13

6 Determinants (SHIFTERS) of Supply

• Expectations of Future Profit• Availability of inputs (resources)• Technology or productivity• Input costs• Number of Sellers• Gov’t Action: Taxes, Subsidies or regs (a subsidy is a

government payment that supports a business or market.)

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EATING!!

Shifters Practice with White Boards

1. Is this a supply or demand shifter?2. Will there be an increase or decrease?

3. What is the determinant (shifter)?

4. Draw the movement on a graph and indicate the shifter with an initial.

What happens in the market for Cigars when . . .

• A new study shows that smoking cigars results in lots of wrinkles.

What happens in the market for Butter when . . .

• The price of margarine goes up.

What happens in the market for Jelly Beans when . . .

• The price of jellybeans goes up

What happens in the market for MARTA when . . .

• MARTA workers go on strike

Hot Dogs

• 60 Minutes does an expose called "The Truth about Hot Dogs."

What happens in the market for Hula Hoops when . . .

• Brad Pitt confides to People magazine that "he gets a big kick out of his hula hoop."

What happens in the market for Taxi Service when . . .

• MARTA workers go on strike

Yachts

• The average price of stocks falls by 20%

Redwood Lumber

Environmentalists urge consumers to boycott redwood products.

Gasoline

• Large sports-utility vehicles (like Suburbans and Expeditions) become more popular.

What happens in the market for Maple Syrup when . . .

• A tree pest destroys much of the maple trees in New England.

Umbrellas

• Heavy rain is forecast.

What happens in the market for Maple Syrup when . . .

• The price of maple syrup increases.

What happens in the market for iPhones when . . .

A new, faster processor makes it easier for Apple to produce iPhones.

What happens in the market for Apple Juice when . . .

The price of apple juice decreases

What happens in the market for Apple Juice when . . .

The price of apples decreases

What happens in the market for Apple Juice when . . .

A new fertilizer makes apples bigger and faster-growing.

What happens in the market for Jolly Ranchers when . . .

Large tariffs are imposed on imported sugar.

What happens in the market for Champion Sweatshirts when . . .

Champion expects that next month their profits from selling sweatshirts will increase.

U.S. Cars

• The U.S. imposes a tariff on Japanese car imports.

What happens in the market for Homemade soaps & candles when

Stay-at-home moms discover how easy it is to make and sell soap and candles.

Candles

• An electric company official announces that a computer bug will likely result in power outages.

Cowboy Boots

• Old Navy launches an ad campaign called "Everyone in cowboy boots."

BK Whoppers

• McDonald's lowers the price of Big Macs.

Cement

• A 7.9 earthquake hits San Francisco.

Morton 1-5 and Practice Qs

A change in PRICE doesn’t shift the curve. It only causes a movement along the curve.

Too Hot Thursday, October 3Fried egg, anyone? Friday, October 4

● Unit 1b test on Monday, 10/7 (A) and Tuesday 10/8 (B); study guide due day of test--Tutorial after school Friday and Monday!

● Warm up: Warm up: quiz your neighbor on the following: demand; demand shifters; supply; supply shifters; change in Qd and Qs; comparative advantage; circular flow.

● Learning target: I can explain price floors and price ceilings; I can show what happens with a double shift.

● Homework: 1. HW 1-6 due 10/3 NOW--please get it out for me to review 2. College Board Progress Check due Sunday 10/6 (A) or

Monday 10/7 (B)

1. Which of the following will cause the quantity supplied for milk to decrease?

A.Decrease in the price of a key resourceB.A decrease in the number of milk producersC.A decrease in the price of milkD.An increase in the price of milkE.A subsidy for milk producers

46

Practice Questions

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Supply Practice with Burgers

1. Strange virus kills 20% of cows 2. Price of hamburgers increase 30%3. Government taxes burger producers4. New bun-baking technology cuts production time in

half5. The government subsidizes beef producers6. Minimum wage increases to $20

1. Which determinant (SHIFTER)?2. Increase or decrease?3. Which direction will curve shift?

47Copyright ACDC Leadership 2018

And why does Ms. Browngive us so many darn quizzes?

Questions about HW 1-6?

Q

$5

4

3

2

1

PDemand Schedule

10 20 30 40 50 60 70 8050

P Qd

$5 10

$4 20

$3 30

$2 50

$1 80

Supply Schedule

P Qs

$5 50

$4 40

$3 30

$2 20

$1 10

Supply and Demand are put together to determine equilibrium price and equilibrium quantity

Equilibrium Price = $3 (Qd=Qs)

Equilibrium Quantity is 30

D

S

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Q

$5

4

3

2

1

PDemand Schedule

10 20 30 40 50 60 70 8051

P Qd

$5 10

$4 20

$3 30

$2 50

$1 80

Supply Schedule

P Qs

$5 50

$4 40

$3 30

$2 20

$1 10D

S

At $4, there is disequilibrium. The quantity demanded is less than quantity supplied.

Surplus (Qd<Qs)

How much is the surplus at $4?

Answer: 20

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Q

$5

4

3

2

1

PDemand Schedule

10 20 30 40 50 60 70 8052

P Qd

$5 10

$4 20

$3 30

$2 50

$1 80

Supply Schedule

P Qs

$5 50

$4 40

$3 30

$2 20

$1 10D

S

At $2, there is disequilibrium. The quantity demanded is greater than quantity supplied.

Shortage(Qd>Qs)

How much is the shortage at $2?

Answer: 30

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Q

$5

4

3

2

1

PDemand Schedule

10 20 30 40 50 60 70 8053

P Qd

$5 10

$4 20

$3 30

$2 50

$1 80

Supply Schedule

P Qs

$5 50

$4 40

$3 30

$2 20

$1 10D

S

Answer: 70

How much is the shortage if the price is $1?

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Q

$5

4

3

2

1

PDemand Schedule

10 20 30 40 50 60 70 8054

P Qd

$5 10

$4 20

$3 30

$2 50

$1 80

Supply Schedule

P Qs

$5 50

$4 40

$3 30

$2 20

$1 10D

SWhen there is a surplus, producers lower prices

The FREE MARKET system automatically pushes the price toward equilibrium.

When there is a shortage, producers raise prices

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Influencing Market Outcomes: Price Ceilings and Price Floors

● Price ceilings and price floors prevent the market (i.e., buyers and sellers negotiating) from determining prices that allocate goods and resources.

Qo

$5

4

3

2

1

PDemand Schedule

10 20 30 40 50 60 70 8056

P Qd

$5 10

$4 20

$3 30

$2 50

$1 80

Supply Schedule

P Qs

$5 50

$4 40

$3 30

$2 20

$1 10

Supply and Demand are put together to determine equilibrium price and equilibrium quantity

D

SWhat if the

government set a minimum price (price floor) of $4?

Qo

$5

4

3

2

1

PDemand Schedule

10 20 30 40 50 60 70 8057

P Qd

$5 10

$4 20

$3 30

$2 50

$1 80

Supply Schedule

P Qs

$5 50

$4 40

$3 30

$2 20

$1 10D

S

A $4 “price floor” would result in a surplus. The quantity demanded is less than quantity supplied.

Surplus (Qd<Qs)

How much is the surplus with a $4

price floor?Answer: 20

Price floor

Influencing Market Outcomes: Price Floors

● Price floor is the lowest price set by law that can be paid for a good or service● Minimum wage is an example: this is the lowest legal wage

that can be paid to most workers

Price Floors● Advantages:

● Minimum wage raises poor people’s incomes and provides a measure of equity

● Disadvantages:● Employers may hire fewer workers at higher wages, therefore

might result in an increase in unemployment

Qo

$5

4

3

2

1

PDemand Schedule

10 20 30 40 50 60 70 8060

P Qd

$5 10

$4 20

$3 30

$2 50

$1 80

Supply Schedule

P Qs

$5 50

$4 40

$3 30

$2 20

$1 10D

S

How much is the surplus if the price is $5?

Answer: 40

What if the government

sets a price ceiling (maximum price) of

$2?

Qo

$5

4

3

2

1

PDemand Schedule

10 20 30 40 50 60 70 8061

P Qd

$5 10

$4 20

$3 30

$2 50

$1 80

Supply Schedule

P Qs

$5 50

$4 40

$3 30

$2 20

$1 10D

S

With a $2 price ceiling, there is a shortage. The quantity demanded is greater than quantity supplied.

Shortage(Qd>Qs)

How much is the shortage at $2?

Answer: 30Price ceiling

Influencing Market Outcomes: Price Ceilings

Price ceiling is the maximum price set by law that can be charged for a product or services.

Examples: rent control laws in NYC keep some rental rates lower than the market price; $25 max price for car emissions tests in Georgia

Influencing Market Outcomes● Price ceiling disadvantages:– Demand becomes too high.

– Suppliers face lower profits, therefore some suppliers limit service or leave market altogether.

– Advantages:– Achieve social goals of equity and security– Individuals who could not afford the market

price now may be eligible

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65

2008 Exam

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2008 Audit Exam

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2012 Exam

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Turkey Economics

https://www.usnews.com/news/articles/2015/11/24/why-do-turkey-prices-fall-just-before-thanksgiving

http://www.marottaonmoney.com/the-economics-of-a-thanksgiving-turkey/68

What do you think happens to the demand for turkey around Thanksgiving?

What do you think happens to the supply of turkeys around Thanksgiving?

DRAW IT!Read the articles below. Compare your prediction to the

information in the articles. Discuss your findings.

Double Shifts• Suppose the demand for milk increased at the

same time as production technology improved. • Use S&D Analysis to show what will happen to

PRICE and QUANTITY.• Double Shift Rule: If TWO curves shift at the

same time, EITHER price or quantity will be indeterminate (ambiguous).

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70

Demand increases AND supply increases Price

D

S

QuantityQe

D1

PeP1

Q1P indeterminate

Q increase

S1

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71

P indeterminateQ increase

Trick: Draw it out separately and combine the results

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72

P decreaseQ indeterminate

What if supply increases and demand falls?

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73

P indeterminateQ decrease

What if supply decreases and demand falls?

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Kahoot