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Supply & Demand

Supply & Demand. Essential Question: How are prices set ????. Seller ?. Both ______ and _______. Buyer?. Cornell Notes Summary. Explain the meaning of political cartoon of the man and the gas can:. Setting an Economy’s Price System.

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Supply & Demand

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  1. Supply & Demand

  2. Essential Question: How are prices set ???? Seller ? Both ______ and _______ Buyer?

  3. Cornell Notes Summary • Explain the meaning of political cartoon of the man and the gas can:

  4. Setting an Economy’s Price System • To understand how a nation’s economy functions it is important to understand the nation’s ______ _______ • The _______that determines _______ are called the forces of _______and _________ • The place _________ _______ two forces ______is called the _________

  5. Marketplace • Marketplace is a ___________that brings together buyers and sellers of a particular good and service to _________a market or _______ _______ • _______ ________ sets stock prices • NASDAQ is an “electronic” marketplace • Commodities market sets price of corn, wheat, etc.

  6. Demand • ________is a _______which shows the various amounts of a product that _________are ________and able to ______at each price during a specified timeperiod. • e.g. Swimming suits have a different price and quantity demanded in summer vs. winter

  7. Law of Demand • Law of Demand says that as the _______of an item _______, the ________demanded will ________; and, as the price of an item increases, the quantity demanded will decrease • The quantity demanded varies inversely with the price

  8. Supply • _______is a schedule which shows the amounts of a good or service a _________is _________and able to _______available at each price during a specified time period • Law of Supply states that the quantity of a commodity supplied varies directly with its price: the _________of ________and _________offered for sale _________as the price _________ (Blockbuster story).

  9. Cornell Notes Summary • In your own words describe what the “Law of Demand” is: • In your own words describe what the “law of Supply” is:

  10. Equilibrium Price • Equilibrium Price (also called the Market price) is the _______at which goods and services may _______be _______and sold. • ____________Price is where quantity _________is _______to the quantity __________

  11. What’s this “across the board” stuff have we been talking about ? What on earth does we mean ?

  12. Aggregate (Market) Demand • What events would increase or decrease the aggregate or market demand for goods and services “across the board” • At every price range – generic Shaw’s brand ice cream to Ben and Jerry’s premium brand !

  13. 1. ____________ • More lemonade will be demanded • More bathing suits will be demanded • More sun tan lotion will be demanded

  14. 2. ____________ • __________creates trends • Gap • Everybody in vests! • Everybody in leather • Everybody in stripes • Some advertising can decrease demand • SUV = Terrorism

  15. 3. Change in ________ • A _______in income will increase ________for ________goods ( Rolex) and decrease demand for inferior goods( Timex watch) • Conversely, a __________in income will increase demand for _________goods ( Timex) and decrease demand for superior goods ( Rolex)

  16. 4. ______________ • If the Farmer’s Almanac forecasts a cold winter people may demand more snow tires and rock salt

  17. 5. Price of ________ ________ • Substitute Goods • A _____in the price of one (e.g. butter) may _______the __________for the ___________( margarine) • This is a direct relationship • Complementary Goods • An increase in the price of one good ( e.g cameras) will decrease the demand for the complementary good (film/memory cards). • This is an inverse relationship

  18. 6. _______________ • Number and _______of __________in the Market can change demand • _________________are getting ready to retires • Increase __________ for: • More housing in Florida and Arizona • ___________ _______ Complexes • Walkers • _______________

  19. Cornell Notes Summary • List the 6 factors that can cause the Demand for certain goods to increase or decrease:

  20. ..and they are called “Determinants of Aggregate Supply” Just as there are events that can cause demand “across the board” -at every price level to change….there are also ________that can _______ _______ “across the board”- at every price level- to ________!

  21. Determinants of Supply What could cause a huge increase or decrease in supply across the board (and a change in price is not a factor !) • ________ _________ ( raw materials) • _______________(produce more products faster & more efficiently) • _____________ • Subsidies ( Gov’t grants) • Related Goods ( e.g corn, wheat) • ___________________ • ___________ ____ __________in the Market

  22. Cornell Notes Summary • Explain how a catastraphy like a long drought in Iowa can affect supplies of Corn and how that would effect prices of: • Feed (for the cattle): • Meat in the Supermarkets: • Price of milk:

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