BMI's Top 10 Worst Economic Myths of 2010
In a time of universal deceit - telling the truth is a revolutionary act.
The Make-Up for the Chapter 3 Section 1 Quiz is today.
The Chapter 2 Make-Up Test is today.
The Ch. 2 Sec. 3 American Free Enterprise Make-Up Quiz is today.
The electronic edition of the Philadelphia Inquirer is available. We have the Sunday edition, available on Mondays, in addition to the Tuesday through Friday editions on the other days.
Please follow the steps below:
Click on the words "Access e-Inquirer" located on the gray toolbar underneath the green locker on the opening page.
Prices and Markets
Chapter 4 Demand
(Supply and) Demand
In-class assignment: in your own words, summarize and explain supply and demand. Draw an individual (each student) sample Supply and Demand Curve as it is described in the video. What is the relationship between prices and quantity demanded? What does it mean in Economics to move towards equilibrium? What is the consumer surplus? What is a producer surplus?
Supply and Demand Screen shot 1
Section 1 What is Demand?
Deriving the Demand Curve
In-class assignment: if asked to explain to a friend who knew nothing about the demand curve, how would you explain it? Where does the demand curve come from?
The Law of Demand
Demand refers to the amount of a good or service that people are willing and able to buy at a specified price.
|Best Selling Christmas Items|
|2009||Nook eReader (Barnes & Noble)|
|2008||Elmo Live (Fisher Price)|
|2006||Playstation 3 (Sony)|
|2005||Xbox 360 (Microsoft)|
|2001||Bratz Dolls (MGA Entertainment)|
|2000||Razor Scooters (Razor USA)|
Diminishing Marginal Utility
In-class assignment: define diminishing marginal utility based on the video and its explanation.
What makes us happy? Is Jim happy? Is there a difference if Jim is hungry, or not? Is there a difference between cookie #1 and cookie #2, and thereafter etc.? What happens as he eats cookies? What do we discover according to this experiment? What is the Law of Diminishing Marginal Utility? Is there a point Jim should have stopped eating cookies?
An Introduction to Demand
How do you react to a change in the price of an item? How does this illustrate the concept of demand?
The Law of Demand
How does the market demand curve reflect the Law of Demand?
Demand and Marginal Utility
In-class assignment: working with a partner, and using the graphic organizer, explain how a change in price changes the quantity demanded of an item.
How does the principle of diminishing marginal utility explain the price we pay for another unit of a good or service?
Ch. 4 Sec. 2 Reading Strategy Determinants Of Demand
Working with a partner, and using the graphic organizer, explain how a change in price changes the quantity demanded of an item.
Change in Demand vs Change in Quantity Demanded
What happens to demand? Is there anything that could alter the underlying demand? What does a shift to the left indicate? What happens when apartment rent increases? Is a house a substitute? What is the difference between change in demand vs change in quantity demanded?
Income and Substitution Effects
We want to consider Jimmy. What are Income and Substitution Effects? How do they work? How do they add up to the total price effect? What is the substitution effect? What is the income effect?
7th to enjoy:
Mrs. Tan, Mr. Lee, and the Price Elasticity of demand, 1:39
So let’s review the essentials. The law of demand tells us what we all know—that when prices go up demand goes down and when prices go down demand goes up. Demand measures the amount of a good or service that people are willing and able to buy at a specified price. And a demand curve plots the size of demand at various prices. Several factors influence demand: diminishing marginal utility, income, substitution goods, complementary goods, and tastes or preferences. And the more that a price change influences our willingness and ability to buy a product, the more elastic is that product’s demand.
Factors that Increase Demand, Shifting Curve to the Right:
- Increased income
- Increase in price of substitution goods
- Decrease in price of complementary goods
- Changing consumer tastes
- Decreased income
- Decrease in price of substitution goods
- Increase in price of complementary goods
- Changing consumer tastes
How about considering entertaining complementary goods, baseball tickets and hot dogs?
Turns out that sales in baseball tickets and Dodger Dogs don't track each other perfectly. Since the economy went into decline a couple years back, prices for baseball tickets have held steady or even increased. But attendances haven't fallen too dramatically. Ballpark hot dog sales, though, have fallen off sharply.
What does that mean? It means that hot dogs have greater price elasticity than baseball tickets. People still want to go to the ballgame, even if tickets become more expensive relative to incomes. But they're willing to forego the extra five or ten bucks they might have spent on an overpriced hot dog once they're inside.
Ballpark concession owners from coast to coast must be crying into their $12 "souvenir cup" beers.
Complementary goods also impact demand. Complementary goods are goods that go together or are related: beer and pretzels, cameras and film, polyester bell bottoms and platform shoes, Rogaine and hair gel.
When the price of one good changes, its complementary good is affected. If film prices increase, people will buy fewer cameras. If polyester bells drop in price, demand for the four-inch platforms that best highlight the timeless lines of the disco-era bad-boys will rise. And so on.
The demand curve for a good will shift to the left if the price of its complementary good increases. And vice versa.
One awesome example of complementary goods: baseball tickets and hot dogs. Because what goes better with America's pastime than a delicious piece of mystery meat on a bun, with ketchup and mustard?
|Top 10 Hot Dog Baseball Stadiums for 2005|
|Stadium||Hot Dogs Sold|
|1||Dodger Stadium (Los Angeles)||1,674,400|
|2||Coors Field (Colorado)||1,545,000|
|3||Wrigley Field (Chicago)||1,543,500|
|4||Yankee Stadium (New York)||1,365,000|
|5||Minute Maid Park (Houston)||1,248,000|
|6||Edison Field (Anaheim)||1,133,000|
|7||HHH Metrodome (Minnesota)||850,000|
|8||Citizens Bank Park (Philadelphia)||800,000|
|9||Shea Stadium (New York)||745,000|
|10||U.S. Cellular Field (Chicago)||495,000|
Companies in the News
Change in the Quantity Demanded
The Income Effect
The Substitution Effect
How is a change in the quantity demanded illustrated on the demand curve?
Figure 4.4 Change in Demand, p. 99
Change in Demand
Figure 4.4 Change In Demand
The Global Economy and You
Digital Demand in South Korea
Number of Consumers
How do changes in consumer income and tastes affect the demand curve?
Ch. 4 Sec. 2 Section Review Determinants Of Market Demand
With a partner, and using the graphic organizer, describe the determinants of market demand.
Chapter 4 Section 3 Elasticity of Demand
Elasticity Economics, 4:57
How sensitive are consumers to a change in price?
How much less will they buy if prices are raised?
How much more will they buy if prices are lowered?
WHEN PRICES CHANGE
How much does quantity change?
How elastic is demand?
WHAT IMPACTS DEMAND
Availability of Substitutes
Percent of Consumers Budget
Time Period of Adjustment
Can easily change
A lot of choices
In-class assignment: with a partner, while screening the video, answer the following.
Is the demand for gasoline inelastic?
What happens to revenue if prices are changed?
Explain inelastic demand.
Explain elastic demand.
What examples would illustrate inelastic and elastic?
Applying Economic Concepts
Demand Elasticity, 4:08
Walmart Joins War On YOU - If you SEE SOMETHING SAY SOMETHING, :40
The Global Economy
Trading Gold for Salt
Unit Elastic Demand
The Total Expenditures Test
Determining Total Expenditures
Revolution in e-Commerce
Jeff Bezos: Founder and CEO, Amazon, 4:04
As the founder and chief executive officer of Amazon.com, Jeff Bezos 86 has revolutionized commerce and pioneered a wide range of online innovations, from user reviews to one-click shopping.
Bezos graduated summa cum laude and Phi Beta Kappa from Princeton with a degree in electrical engineering and computer science. Before heading to Seattle to found Amazon, Bezos helped D. E. Shaw & Co build one of the most technically sophisticated quantitative hedge funds on Wall Street.
In-class assignment: answer the questions listed below.
Should you fail in order to be a success?
What advice does he offer for undergraduates?
What should you take pride in?
Do you need to be passionate about learning something?
What is his latest project? How does he explain his latest project?
Elasticity and Profits
Determinants of Demand Elasticity
Can the purchase be Delayed?
Are Adequate Substitutes Available?
Does the Purchase Use a Large Portion of Income?
Email (or hand in hard copy) to firstname.lastname@example.org.
All I Want For Christmas Is A Job - by below tha surface, 3:06
p. 95, #6-7