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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