Unit 3The Market and Trade

Market Trade

Demand• The quantity of a good or service that consumers are both willing and

able to buy at various places

• Difference between wants and demand?

Characteristics of Consumers• Willingness to buy

• Ability to pay for it

• Music examples

Quantity Demanded• The amount of a good or service that consumers are willing and able

to buy at a specific price

• Demand is expressed in terms of a time frame(per week, per day)

• Does price effect demand?

Demand Schedule/Demand Curve

Law of Demand• Demand and price are inverse(opposites)

• As price goes up, demand goes down

• As price goes down, demand does up

Why does demand change?• Price, duh• Change in income• What happens if you make more money? Get laid off?

• Change in number of consumers• What happens if a flood occurs? A festival happens?

• Change in consumer preference• VHS and DVDs

Why does demand change?• Change in consumer expectations• Expect a sale

• Change in price of substitute goods• HCF and Name Brand

• Change in price of complimentary goods• Printers and ink, hamburgers and buns

Demand Video• https://www.youtube.com/watch?v=QvGLcCTXk9o

Warm-Up• Demand is always referring to _____________(producers or

consumers)

• Write down the 7 reasons demand can change and give an example of each (write this in your notes)

• You may work with a partner

Graphing Changes in Demand

Changes in the curve• An increase in demand causes the demand curve to shift to the right• A decrease in demand causes the demand curve to shift to the left

• An increase or decrease in price causes the line to move stretch or shrink (up or down)

Supply• The quantity of a good or service that producers are willing to and

able to offer for sale at various prices

• Difference between supply and demand?

Characteristics of Producers• The number one goal of the producer is earn maximum profit

Quantity Supplied• The amount of a good or service that producers are willing and able

to offer for sale at a specific price

Supply Schedule/Supply Curve

Supply Curve• Shows the relationship between price and the quantity producers are

willing and able to supply

Law of Supply• Price and quantity move in the same direction

• As price goes up, quantity supplied goes up

• As price goes down, quantity supplied goes down

Why does supply change?• Price, duh

• Change in the amount of producers• More producers leads to higher supplies

• Change in cost of factors of production• Decrease in cost of production leads to an increase in supply

Why does supply change?• Changes in Technology• Technology can decrease cost, which leads to an increase in supply

• Changes in producer expectations

• Changes in Government policy

Supply video• https://www.youtube.com/watch?v=LwLh6ax0zTE

• https://www.youtube.com/watch?v=ewPNugIqCUM

Warm-Up• Draw a demand curve(label the x and y axis)

• Draw a supply curve (label the x and y axis)

• How does price effect demand

• How does price effect supply

Graphing Changes in Supply• An increase in demand causes the supply curve to shift to the right

• A decrease in demand causes the supply curve to shift to the left

Demand and Supply Meet• Market equilibrium: the quantity of a good or service that

consumers are willing and able to buy equals the quantity that producers are willing and able to sell• Market price is the price a willing consumer pays to a

willing producer for the sale of a good or service

Supply and Demand Schedule/Curve

When the price is not right• Disequilibrium- when the quantity of a product demanded does not

meet the quantity of a product supplied; causing a shortage or surplus

• Shortage- a lack of something

• Surplus- an excess of something

Shortage/Excess Demand• Talk with a partner or think by yourself about two examples of

shortages or excess demand

• How to solve excess demand?

Surplus/Excess Supply• Talk with a partner or think by yourself about two examples of surplus

or excess supply.

• How to solve excess supply

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

Warm-Up• If there is an increase in quantity on a demand or supply curve which

way does the line shift? Draw an example.

• If there is a decrease in quantity on a demand or supply curve which way does the line shift? Draw an example.

• List two reasons why demand might shift on a demand curve, give an example for each.

• List two reasons why supply might shift on a supply curve, give an example for each.

Warm-Up• What does equilibrium mean? Label the equilibrium on a graph.

• What is a surplus? Draw an example.

• What is a shortage? Draw an example.

How do shifts in the curve effect markets?• If there is a shift in the demand or supply curve there is a new

equilibrium price

Effect of a change in demand on equilibrium• Does the change increase (shift to the right) or decrease(shift to the

left) the quantity demanded

• What are the new equilibrium price and quantity? Did the price/quantity increase or decrease?

Effect of a change in supply on equilibrium• Does the change increase (shift to the right) or decrease(shift to the

left) the quantity supplied?

• What are the new equilibrium price and quantity? Did the price/quantity increase or decrease?

Effect of changes in both supply and demand on equilibrium • Does the change increase (shift to the right) or decrease(shift to the

left) the quantity supplied and quantity demanded?

• What are the new equilibrium price and quantity? Did the price/quantity increase or decrease?