9/3/13

“Wants vs. Needs”

1. What makes something an economic “need”?• Needs have to be necessary for survival.

2. Explain why someone might argue that getting an education is an economic need.

On desk: Your object of value

9/3/13

Econ. Agenda

1. Silent Auction2. What gives things value? (class notes)3. Supply & Demand, Substitutes (class notes)4. Assignment: Substitutes, Supply & Demand

HW (write in agendas):• Substitutes, Supply & Demand assignment due Wed. (A) &

Thurs. (C)

Silent Auction

• Fill out bid sheet for your object• Walk around and SILENTLY bid on everyone’s

objects.

• 5 MINUTES.

Take a look at your bid sheets….

Did you get the amount of money you were hoping for?

Why or why not?

9/3/13Class notes

What gives things value?

• 2 types of value:

1. Sentimental value:• Worth based on personal or emotional association.• How much is something worth to you?

2. Real value:• Generally agreed upon material worth.• How much is something worth to everyone else?

• Silent Auction examples:

9/3/13Class notes

Different factors affect the real value of products:

• Supply:• Quantity available• How much or how many of a product is available?

• Demand:• Quantity wanted• How many people want a product?• **Demand is generally measured by a product’s price• How much are people willing to pay for a product?

9/3/13Demand & price example

• Nike releases Air Jordan 7’s & everyone wants them.

• Demand: high or low?• Price: high or low?

• Harrison tries to sell his dirty old sneakers that no one wants.

• Demand: high or low?• Price: high or low?

9/3/13Class notes

How does supply affect demand?

• As supply increases …demand decreases

• As supply decreases …demand increases

Supply and Demand Candy AuctionYou are starving & I have…. Bid as much as you want.

1 package of candy

package of candy

package of candy

What happened to the demand for candy as the supply increased?

Candy supply:

Demand for candy (price you were willing to pay for each piece):

9/3/13Class notes

2 ways to increase the supply of a product:(increase in supply = ______________ in demand/price)

1. Increase supply of a particular product

2. Increase the number of substitutes• Substitute: • Similar goods that give consumers the option

to buy basically the same product

Substitutes affect supply and demandExample: Cell Phones

• Now that Nokia, Samsung, and Verizon make smart phones, the supply of smart phones has increased.

• Thus, the iPhone price has decreased because the supply of smartphones has increased.

Original iPhone - $500

9/3/13Class notes

How does supply affect demand?

• As supply increases …demand decreases

• As supply decreases …demand increases

Substitutes Assignment(due: next class)

• Choose any brand name product that you use.• Think of at least 4 substitutes for your

product.• Find prices for all items & fill out chart.• Write 2 scenarios about how your product’s

supply might affect it’s demand & vice-versa.

Brand-name product:

Price:

Substitute #1:

Price:

Substitute #3:

Price:

Substitute #2:

Price:

Substitute #4:

Price:

Substitutes for Lots of Curls Shampoo

Aroma Therapy

$4.99

Lots of Curls

6.99

Baby Shampoo

2.99

Pert Plus

5.99Cheer Chicks

3.99By Harrison Delfin

Substitutes Assignment(due: next class)

• Choose any brand name product that you use.• Think of at least 4 substitutes for your

product.• Find prices for all items & fill out chart.• Write 2 scenarios about how your product’s

supply might affect it’s demand & vice-versa.