HOW TO TEACH SUPPLY AND DEMAND



Supply – Demand

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Simple Circular Flow

McConnell & Brue, 15th Ed., p. 35

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NOTESHEET: DEMAND AND SUPPLY

|DEMAND |SUPPLY |

|Demand Schedule |Supply Schedule |

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|Demand Curve |Supply Curve |

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|Demand is ________________________________ |Supply is__________________________________ |

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|_________________________________________ |__________________________________________ |

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|_________________________________________ |__________________________________________ |

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|The Law of Demand: ________________________ |The Law of Supply: _________________________ |

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|__________________________________________ |_________________________________________ |

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|__________________________________________ |_________________________________________ |

|What causes a “change in quantity demanded”? (∆QD) |What causes a “change in quantity supplied”? (∆QS) |

|__________________________________________ |__________________________________________ |

|What causes a “change in demand”? (∆D) |What causes a “change in supply”? (∆S) |

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|__________________________________________ |__________________________________________ |

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|__________________________________________ |__________________________________________ |

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|__________________________________________ |__________________________________________ |

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|__________________________________________ |__________________________________________ |

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|__________________________________________ |__________________________________________ |

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|__________________________________________ |__________________________________________ |

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|__________________________________________ |______________________________________ |

|Demand |Supply |

|Elastic Demand |Elastic Supply |

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|P |P |

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|Q |Q |

|Movie Tickets |Tomatoes |

|Inelastic Demand |Inelastic Supply |

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|P |P |

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|Q |Q |

|Movie Sodas |Tomatoes |

|Equilibrium and |Disequilibrium |

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| |Excess Quantity Supplied = __________________ |

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| |Equilibrium Price = ________________________ |

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| |Excess Quantity Demanded = ________________ |

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|Consumer’s Surplus |Producer’s Surplus |

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|_____________________ P |_______________________ P |

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|_____________________ |_______________________ |

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|_____________________ |_______________________ |

|Q |Q |

|_____________________ |_______________________ |

|CD’s |CD’s |

|Economic Analysis - Easy as 1, 2, 3 |Move Two Curves |

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| |Rule: ___________________________________ |

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| |________________________________________ |

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| |_________________________________________ |

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|C.D.’s | |

PRACTICESHEET: SUPPLY – DEMAND

Draw a well-labeled graph and complete the analysis using the last item on your Notesheet as a model.

|No. |Prompt |Graph |Eco Analysis |

| 1 |It becomes known that an electronics | |1. Equilibrium Before – |

| |store is going to have a sale on their | |2. Change – |

| |computer games 3 months from now. | |Supply or Demand first? |

| | | |Determinant? |

| | | |Increase or decrease? |

| | | |3. Equilibrium After – |

| | | |Price - |

| | | |Quantity - |

| 2 |The workers who produce the computer | |1. Before – |

| |games go on strike for over two months | |2. Change – |

| | | |Supply or Demand first? |

| | | |Determinant? |

| | | |Increase or decrease? |

| | | |3. After – |

| | | |Price - |

| | | |Quantity - |

|3 |The workers who produce the computer | |1. Before – |

| |games receive a $2 per hour wage | |2. Change – |

| |increase. | |Supply or Demand first? |

| | | |Determinant? |

| | | |Increase or decrease? |

| | | |3. After – |

| | | |Price - |

| | | |Quantity - |

|4. |When the average price of movie tickets| |1. Before – |

| |rises, it has an effect on the purchase| |2. Change – |

| |of computer games. (Analyze computer | |Supply or Demand first? |

| |games.) | |Determinant? |

| | | |Increase or decrease? |

| | | |3. After – |

| | | |Price - |

| | | |Quantity - |

|5. |The price of business software, a | |1. Before – |

| |product also supplied by computer game | |2. Change – |

| |software producers, rises. (Analyze | |Supply or Demand first? |

| |computer games.) | |Determinant? |

| | | |Increase or decrease? |

| | | |3. After – |

| | | |Price - |

| | | |Quantity - |

|6. |A reputable private research institute | |1. Before – |

| |announces that children who play | |2. Change – |

| |computer games also improve their | |Supply or Demand first? |

| |grades in school. | |Determinant? |

| | | |Increase or decrease? |

| | | |3. After – |

| | | |Price - |

| | | |Quantity - |

|7. |Because of the use of mass production | |1. Equilibrium Before – |

| |techniques, the amount of labor | |2. Change – |

| |necessary to produce games decreases. | |Supply or Demand first? |

| | | |Determinant? |

| | | |Increase or decrease? |

| | | |3. Equilibrium After – |

| | | |Price - |

| | | |Quantity - |

|8. |The price of computers increases. | |1. Equilibrium Before – |

| |(Analyze computer games.) | |2. Change – |

| | | |Supply or Demand first? |

| | | |Determinant? |

| | | |Increase or decrease? |

| | | |3. Equilibrium After – |

| | | |Price - |

| | | |Quantity - |

|9. |The Federal government imposes a $5 per| |1. Equilibrium Before – |

| |game tax on the manufacturers of the | |2. Change – |

| |games. | |Supply or Demand first? |

| | | |Determinant? |

| | | |Increase or decrease? |

| | | |3. Equilibrium After – |

| | | |Price - |

| | | |Quantity - |

|10. |The manufacturer of the computer games | |1. Equilibrium Before – |

| |raises the price on the games. | |2. Change – |

| | | |Supply or Demand first? |

| | | |Determinant? |

| | | |Increase or decrease? |

| | | |3. Equilibrium After – |

| | | |Price - |

| | | |Quantity - |

|11. |The popularity of the computer games | |1. Equilibrium Before – |

| |increases in the world markets. At the| |2. Change – |

| |same time new technology lower | |Demand ( or ↓ ? Determinant? |

| |production costs. | |Supply ( or ↓ ? Determinant? |

| | | |3. Equilibrium After – |

| | | |Price - |

| | | |Quantity – |

|12. |A large firm enters the game business | |1. Equilibrium Before – |

| |with a new line of exciting games. | |2. Change – |

| |(Analyze the whole game industry,) | |Supply or Demand first? |

| | | |Determinant? |

| | | |Increase or decrease? |

| | | |3. Equilibrium After – |

| | | |Price - |

| | | |Quantity - |

|13. |In order make computer games available | |1. Equilibrium Before – |

| |to low-income families, Congress sets a| |2. Change – |

| |price ceiling for the games. | |Supply or Demand first? |

| | | |Determinant? |

| | | |Increase or decrease? |

| | | |3. Equilibrium After – |

| | | |Price - |

| | | |Quantity - |

|14. |In order to protect American producers | |1. Equilibrium Before – |

| |of games from foreign competition, | |2. Change – |

| |Congress imposes high trade barriers | |Supply or Demand first? |

| |against the foreign-made games. | |Determinant? |

| |(Analyze the American firms.) | |Increase or decrease? |

| | | |3. Equilibrium After – |

| | | |Price - |

| | | |Quantity - |

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Price Quantity

Price Quantity

1. Before Change

2. Change

• Did it affect supply or demand first?

• Which determinant caused the change?

• Will it increase or decrease?

3. After Change

Price? Quantity?

Example:

*Population ( ( Demand (

*New technology( costs“!( Supply (

r decrease?

3. After Change

Price? Quantity?

Example:

*Population ( ( Demand (

*New technology( costs↓( Supply (

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