#19. should have listed: "d) Anne Louise Germaine de Staël"
#20. do not answer, skip the question entirely, go on to #21.
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Britain emerged in Victorian times as the world's first industrial power, but the transition wasn't smooth.
Some entrepreneurs made fortunes from the new cotton industry, but many of the factory start-ups went bust. Success depended on a variety of factors, which you will encounter as you play the game.
As you play, your stacks of money will rise and fall, depending on the choices you make, and you'll find out if you can make it as a Victorian entrepreneur.
Choose well, make money and the business will survive. Choose badly, and the businessman could end up in debtors' prison.
Spinning mills used 'line shafting', which is the means by which the power of the steam engine is transmitted along rotating shafts (rods) to spinning or weaving mills.
This animation depicts a spinning mill like that found at Quarry Bank museum in Cheshire. It shows a furnace powering a flywheel, which is there to smooth out the otherwise jerky rotation of the crank.
In spinning mills, which could be multi-story, there are large numbers of ropes coming off the flywheel. These 'rope races' convey power to the mill's different floors.
Spinners and weavers now came each day to work in these first factories, which brought together workers and machines to produce large quantities of goods. Early observers were awed at the size and output of these establishments. One onlooker noted: “The same [amount] of labor is now performed in one of these structures which formerly occupied the industry of an entire district.”
The Rocket was designed and built by George Stephenson with the help of his son, Robert, and Henry Booth, for the 1829 Rainhill Trials.
The Trials were held by the Liverpool and Manchester Railway Company, to find the best locomotive engine for a railway line that was being built to serve these two English cities. On the day of the Trials, some 15,000 people came along to see the race of the locomotives.
During the race, the Rocket reached speeds of 24mph during the 20 laps of the course. This was due to several new design features. It was the first locomotive to have a multi-tube boiler - with 25 copper tubes rather than a single flue or twin flue.
The blast pipe also increased the draught to the fire by concentrating exhaust steam at the base of the chimney. This meant that the boiler generated more power (steam), so the Rocket was able to go faster than its rival, and thus secure its place in history.
The Rocket can be seen at the Science Museum, in London.
One of the most important developments of the Industrial Revolution was the creation of a countrywide railway network. The world’s first major rail line went from Liverpool to Manchester in England. Fanny Kemble, the most famous actress of the day, was one of the first passengers:
“We were introduced to the little engine which was to drag us along the rails. . . This snorting little animal, . . . started at about ten miles an hour. . . . You can’t imagine how strange it seemed to be journeying on thus, without any visible cause of progress other than the magical machine . . .”
Early Socialism, p. 370
While the champions of laissez-faire economics praised individual rights, other thinkers focused on the good of society in general. They condemned the evils of industrial capitalism, which they believed had created a gulf between rich and poor. To end poverty and injustice, they offered a radical solution—socialism. Under socialism, the people as a whole rather than private individuals would own and operate the means of production—the farms, factories, railways, and other large businesses that produced and distributed goods. Socialism grew out of the Enlightenment faith in progress, its belief in the basic goodness of human nature, and its concern for social justice.
Are Utopians Dreamers?
A number of early socialists established communities in which all work was shared and all property was owned in common. When there was no difference between rich and poor, they said, fighting between people would disappear. These early socialists were called Utopians. The name implied that they were impractical dreamers. The Utopian Robert Owen set up a model community in New Lanark, Scotland, to put his own ideas into practice.
A poor Welsh boy, Owen became a successful mill owner. Unlike most industrialists at the time, he refused to use child labor. He campaigned vigorously for laws that limited child labor and encouraged the organization of labor unions.
Checkpoint
What did early socialists believe?
Reading Check
Describing
What type of working conditions did the industrial workers face?
Redcoats to Rebels at OSV.
Mystic sign. Photo Source: The Next Generation
Whaling in popular culture: Mountain, "Nantucket Sleighride"
The cold hard steel of the harpoon's point
Struck deep into its side.
We played out line and backed the oars
And took the cruel sleighride.
The term "Nantucket Sleighride" was coined by the whalers to explain what happened after they harpooned a whale. (Nantucket Island was considered the whaling capital of the world during the 19th century.) The first strike of the harpoon was not intended to kill the whale but only to attach it to the whale boat. The whale would take off pulling the whale boat along at speeds of up to 23 mph (37 kmh). The whale would eventually tire itself out, the leading officer in the boat would then use a penetrating lance to kill the whale.
Nantucket Sleighride is Dedicated to Owen Coffin who was cabin boy aboard the whaler Essex, which was destroyed by a sperm whale in 1819. Owen ended up in the lifeboat with Captain Pollard, his uncle. Two other lifeboats also put out. During the next 3 - 4 months, the lifeboats separated. One was never seen again, but some of those on the remaining two boats were eventually rescued.
During those long months at sea (and on desert islands), many of the men died. The remainder eventually had to resort to cannibalism to survive. After the dead of natural causes were consumed, the men determined to draw lots to see who would sacrifice his life for the others. Owen Coffin ``won'' the lottery. The Captain tried to take Owen's place, but the youth insisted on his ``right''. The executioner was also drawn by lot. That ``winner'', another young man named Charles Ramsdell, also tried vainly to swap places with Owen. Again he refused. Owen's body kept the others alive for ten days (Captain Pollard refused to eat his nephew). Another man died, and his body kept Pollard and Ramsdell alive a few more days until they were rescued.
Lyrics
Goodbye, little Robin-Marie
Don't try following me
Don't cry, little Robin-Marie
'Cause you know I'm coming home soon
My ships' leaving on a three-year tour
The next tide will take us from shore
Windlaced, gather in sail and spray
On a search for the mighty sperm whale
Fly your willow branches
Wrap your body round my soul
Lay down your reeds and drums on my soft sheets
There are years behind us reaching
To the place where hearts are beating
And I know you're the last true love I'll ever meet
Starbuck's sharpening his harpoon
The black man's playing his tune
An old salt's sleeping his watch away
He'll be drunk again before noon
Three years sailing on bended knee
We found no whales in the sea
Don't cry, little Robin-Marie
'Cause we'll be in sight of land soon
Section 2 Reaction and Revolution.
After Waterloo, diplomats and heads of state again sat down at the Congress of Vienna. They faced the monumental task of restoring stability and order in Europe after years of war. The Congress met for 10 months, from September 1814 to June 1815. It was a brilliant gathering of European leaders. Diplomats and royalty dined and danced, attended concerts and ballets, and enjoyed parties arranged by their host, Emperor Francis I of Austria. The work fell to Prince Clemens von Metternich of Austria, Tsar Alexander I of Russia, and Lord Robert Castlereagh of Britain. Defeated France was represented by Prince Charles Maurice de Talleyrand.
Congress Strives For Peace
The chief goal of the Vienna decision makers was to create a lasting peace by establishing a balance of power and protecting the system of monarchy. Each of the leaders also pursued his own goals. Metternich, the dominant figure at the Congress, wanted to restore things the way they were in 1792. Alexander I urged a “holy alliance” of Christian monarchs to suppress future revolutions. Lord Castlereagh was determined to prevent a revival of French military power. The aged diplomat Talleyrand shrewdly played the other leaders against one another so France would be accepted as an equal partner.
The peacemakers also redrew the map of Europe. To contain French ambitions, they ringed France with strong countries. In the north, they added Belgium and Luxembourg to Holland to create the kingdom of the Netherlands. To prevent French expansion eastward, they gave Prussia lands along the Rhine River. They also allowed Austria to reassert control over northern Italy.
To turn back the clock to 1792, the architects of the peace promoted the principle of legitimacy, restoring hereditary monarchies that the French Revolution or Napoleon had unseated. Even before the Congress began, they had put Louis XVIII on the French throne. Later, they restored “legitimate” monarchs in Portugal, Spain, and the Italian states.
To protect the new order, Austria, Russia, Prussia, and Great Britain extended their wartime alliance into the postwar era. In the Quadruple Alliance, the four nations pledged to act together to maintain the balance of power and to suppress revolutionary uprisings, especially in France. Another result of the Congress was a system known as the Concert of Europe, in which the powers met periodically to discuss any problems affecting the peace of Europe.
The Vienna statesmen achieved their immediate goals in creating a lasting peace. Their decisions influenced European politics for the next 100 years. Europe would not see war on a Napoleonic scale until 1914. They failed, however, to foresee how powerful new forces such as nationalism would shake the foundations of Europe and Latin America in the next decades.
Reading Check
Explaining
What was the "principle of legitimacy?"
The Conservative Order
Reading Check
Summarizing
What were the views of the conservative movement?
Forces of Change
Liberalism
Nationalism
Balkan Nationalism
Audio
“How is it that they [European powers] cannot understand that less and less is it possible . . . to direct the destinies of the Balkans from the outside? We are growing up, gaining confidence, and becoming independent . . .”
—Bulgarian statesman on the first Balkan War and the European powers
Learn
Focus Question
How did the desire for national independence among ethnic groups weaken and ultimately destroy the Austrian and Ottoman empires?
Audio
Napoleon had dissolved the Holy Roman Empire, which the Hapsburgs had led for nearly 400 years. Austria’s center of power had shifted to Central Europe. Additional wars resulted in continued loss of territory to Germany and Italy. Why did nationalism bring new strength to some countries and weaken others?
In Eastern and Central Europe, the Austrian Hapsburgs and the Ottoman Turks ruled lands that included diverse ethnic groups. Nationalist feelings among these subject peoples contributed to tensions building across Europe.
How did liberalism and nationalism begin to break through the conservative domination of Europe?
The Revolutions of 1848
Revolutionary France: Les Miserables (6:41)
Summary
The backdrop for Victor Hugo's novel Les Miserables is revolutionary France in the 1800s. Les Miserables expresses Hugo's passionate belief in the spiritual possibilities of society, despite the presence of evil. Les Miserables also expresses Hugo's fight for justice, democratic ideals, and basic rights for all people.
What was the main theme of Hugo's novel Les Miserables?
What were Hugo's political beliefs?
Writing Practice
How do the choices made by Jean Valjean reflect his sense of justice and compassion for others?
Another French Revolution
Trouble in the German States
Germany
Note Taking
Recognize Sequence: keep track of the sequence of events that led to German unification by completing a chart like the one below. Add more boxes as needed.
In the early 1800s, German-speaking people lived in a number of small and medium-sized states as well as in Prussia and the Austrian Hapsburg empire. Napoleon’s invasions unleashed new forces in these territories.
Napoleon Raids German Lands
Between 1806 and 1812, Napoleon made important territorial changes in German-speaking lands. He annexed lands along the Rhine River for France. He dissolved the Holy Roman Empire by forcing the emperor of Austria to agree to the lesser title of king. He also organized a number of German states into the Rhine Confederation.
At first, some Germans welcomed the French emperor as a hero with enlightened, modern policies. He encouraged freeing the serfs, made trade easier, and abolished laws against Jews. However, not all Germans appreciated Napoleon and his changes. As people fought to free their lands from French rule, they began to demand a unified German state.
Napoleon’s defeat did not resolve the issue. At the Congress of Vienna, Metternich pointed out that a united Germany would require dismantling the government of each German state. Instead, the peacemakers created the German Confederation, a weak alliance headed by Austria.
Economic Changes Promote Unity
In the 1830s, Prussia created an economic union called the Zollverein (tsawl fur yn). It dismantled tariff barriers between many German states. Still, Germany remained politically fragmented.
In 1848, liberals meeting in the Frankfurt Assembly again demanded German political unity. They offered the throne of a united German state to Frederick William IV of Prussia. The Prussian ruler, however, rejected the notion of a throne offered by “the people.”
Checkpoint
What was the German Confederation?
Revolutions in Central Europe
The Hungarian Parliament Passes Legislation Funding an Army Against the Hapsburg Empire, 1848
The mixed symbols on the flag of the Austro-Hungarian Empire
A Multinational Empire
Equally disturbing to the old order were the urgent demands of nationalists. The Hapsburgs presided over a multinational empire. Of its 50 million people at mid-century, fewer than a quarter were German-speaking Austrians. Almost half belonged to different Slavic groups, including Czechs, Slovaks, Poles, Ukrainians, Serbs, Croats, and Slovenes. Often, rival groups shared the same region. The empire also included large numbers of Hungarians and Italians. The Hapsburgs ignored nationalist demands as long as they could. When nationalist revolts broke out in 1848, the government crushed them.
Revolts in the Italian States
Italy Before 1861
Note Taking
Reading Skill: Recognize Sequence
As you read and hear a lecture on the Italian revolt, create a time line showing the sequence of events from 1831 to 1871 that led to Italian unification (the time line continues in the next section of the Chapter).
After a failed revolution against Austrian rule in northern Italy, many rebels, fearing retribution, begged for funds to pay for safe passage to Spain. Giuseppe Mazzini (mat see nee), still a boy, described his reaction to the situation:
“He (a rebel) held out a white handkerchief, merely saying, ‘For the refugees of Italy.’ My mother . . . dropped some money into the handkerchief. . . . That day was the first in which a confused idea presented itself to my mind . . . an idea that we Italians could and therefore ought to struggle for the liberty of our country. . . .”
—Giuseppe Mazzini, Life and Writings
Learn
Focus Question
How did influential leaders help to create a unified Italy?
Garibaldi
Reading Check
Identifying
What countries experienced revolutions in 1848?
Eyewitness to History
Revolutionary Excitement
Analyzing Primary Sources, p. 377
And, to anticipate further revolutionary developments, we will consider Karl Marx.
In-class assignment: answer the following questions about the Congress.
What was the Congress meant to accomplish?
Who was the leading figure of the Congress?
Where was he from?
What was his view of democracy?
Who ultimately came to power through this form of government?
In what country was the first major problems they had to face?
What was Germany composed of?
What country was the second major problem?
What was the name of the alliance that was formed?
What countries formed the four parts of the Alliance?
What other important--three country alliance--was formed?
What was the Congress meant to accomplish?
The Congress attempted to tie the Continental nations together and set up a balance of power between the competing interests of the various countries.
Who was the leading figure of the Congress?
Prince Metternich
Where was he from?
Austria
What was his view of democracy?
Democracy is dangerous and unpredictable.
Who ultimately came to power through this form of government?
Dictators rise to power.
In what country was the first major problems they had to face?
Germany
What was Germany composed of?
Several small, feudal-like states and kingdoms. The Congress formed the German Confederation.
What country was the second major problem?
France
What was the name of the alliance that was formed?
Quadruple Alliance
What countries formed the four parts of the Alliance?
G.B., Austria, Prussia, and Russia. The main purpose was to counter any ambition on the part of France.
What other important--three country alliance--was formed?
Holy Alliance: Austria, Prussia, and Russia. The main purpose was to stop revolution and support the monarchies in power.
1) Early Socialism, p. 370
2) The Conservative Order, p. 372
3) Liberalism, p. 373
4) Nationalism, p. 373-74
Students will be assigned to one of four groups to examine the ideas of these four groups. Then, students will advocate the relative merits of their assigned group.
Define the important points associated with your assigned thought system: socialism, conservatism, liberalism, or nationalism. Points to include are their ideas on the economy and the government's role in the economy and society. What are the strengths and weaknesses of each system in terms of balancing individual freedom and public good?
One of the most important points to note is that the terms, liberalism and conservatism, still used today in American politics, are not used in the same way that the terms were used in the 19th Century. They mean different things today.
Can you name leading figures of socialism? Conservatism? Liberalism? Nationalism?
What do you think the Church thought of these various movements? Would they be in favor or oppose aspects of their thought? Why?
The Congress of Vienna, between Sept. 1814 - 9 June 1815, after that France had surrender in May 1814 (Napoleon was finally defeated at Waterloo 18 June 1815).
It was a conference with ambassadors from many European states, chaired by the Austrian statesman Klemens von Metternich. It was the five "great" nations - UK, Prussia, Austria, France and Russia that decide almost everything. Norway was transferred from Denmark to Sweden and Swedish Pomerania was ceded to Prussia.
The first pictures are the Duke of Wellington who is the man who rarely lost a battle. At Waterloo he and combined British/German forces - with help of Blüchers Prussians - defeated Napoleon for the last time. Later he became Prime Minister of Great Britain and in his youth he led battles in India. Then came a pic on Metternich, and then on Talleyrand. After him come a pic on Tsar Alexander I - the most powerful man in Europe at that time. The two last pics are on Austrian castles...first "Schönbrunn" and then "Belvedere".
Congress of Vienna 1815
Ambassadors:
UK = Duke of Wellington
Prussia = Prince Karl von Hardenberg
Austria = Prince Klemmens von Metternich
Russia = Tsar Alexander I
France = Charles de Talleyrand
Sweden = Count Carl Löwenhielm
Music: Russian folk-song.
Ulf Sawert
Queen Hortense de Beauharnais - Album Artistique de la Reine Hortense (Koninklijk Huisarchief Den Haag)
Les jeunes rêves d'amour
Paula Bär-Giese soprano & pianist
La Reine Hortense project (La Reine d'Hollande 1806-1810)
Recording: Kunstzaal Palace 't Loo, Apeldoorn - The Netherlands
Hortense Eugénie Cécile de Beauharnais, Queen of Holland, Grand Duchess of Berg and Cleves, Countess of Saint-Leu (April 10, 1783 - October 5, 1837), was the wife of Louis Bonaparte, King of Holland and the mother of Napoleon III, Emperor of the French.
Hortense was born in Paris, France, the daughter of Alexandre, Vicomte de Beauharnais and of his wife Josephine Tascher de la Pagerie. In 1794 her father was executed during the Reign of Terror. Two years later her mother married Napoleon Bonaparte.
In 1802 at Napoleon's request, Hortense married his brother Louis Bonaparte. The couple had three sons:
• Napoléon Louis Charles (October 10, 1802 - May 5, 1807)
• Napoléon Louis (October 11, 1804 - March 17, 1831)
• Charles Louis Napoléon, later Napoleon III, Emperor of the French (20 April 1808- 9 January 1873)
In 1806 Napoleon appointed his brother Louis, King of Holland. Hortense accompanied her husband to The Hague, in spite of the fact that their marriage was an unhappy one (the paternity of at least one of Hortense's sons has been questioned). In 1810 Louis abdicated as King of Holland and settled in Germany; Hortense, on the other hand, returned with her sons to France.
In 1811 Hortense gave birth to a son by her lover, Charles Joseph, comte de Flahaut:
• Charles Auguste Louis Joseph (October 21, 1811 - March 10, 1865), later made duc de Morny by his half-brother, Napoleon III.
One video features just the Congress of Vienna music with period pictures supplementing the sound.
The Fezzibomb occurred on Friday November 20, 2009. A bunch of Fezziwiggers (dancers from Fezziwig's Tea Emporium at the Dickens Christmas Fair) met in Embarcadero Bart in San Francisco to dance to music provided by Bangers and Mash.
The Congress of Vienna is a choreographed waltz.
Congress of Vienna dance at Gaskell's held in Oakland October 2005
Ye Gaskell Occasional Dance Society sponsors Victorian ballroom dances several times a year. There are afternoon dance lessons and refresher lessons before the dance. Formal dress.
http://www.gaskellball.com
Brassworks is a live brass band led by Frank Beau Davis. They sound much better in person than in this clip.
http://www.brassworksband.com
Scottish Rite Center in Oakland has a beautiful ballroom for this event.
http://www.scottish-rite.org
Creative sock puppet show as a dramatization of the Congress of Vienna of 1815.
THE AMAZING LEGO REANIMATION OF THE CONGRESS OF VIENNA
Star in the East - Shape Note Christmas Song, 4:48
This shape note nativity song is here sung from The Southern Harmony, a traditional American shape note tunebook from the 19th century. It also appears in The Christian Harmony and other shape note books, most recently in Karen Willard's collection, 'An American Christmas Harp' (2009). As recorded at the Annual Harrod's Creek Shape Note Convention held in historic Harrod's Creek Baptist Church near Brownsboro, Kentucky, April 26 2009.
'JINGLE BELLS' - Original 1857 Version - Tom Roush-Instrumental, 2:35
This is an instrumental of the original 'Jingle Bells' which was then called 'The One Horse Open Sleigh' As you will hear, the melody of the chorus has been changed over the past 152 years.. This jolly Christmas favorite was written by James Pierpoint for a Sunday school Thanksgiving performance. The first verse is played by a piano and harpsichord.
We Three Kings of Orient Are (Sacred Rendition), 5:38
"We Three Kings", also known as "We Three Kings of Orient Are" or "The Quest of the Magi", is a Christmas carol written by Reverend John Henry Hopkins, Jr., who wrote both the lyrics and the music as part of a Christmas pageant for the General Theological Seminary in New York City. It is suggested to have been written in 1857 but did not appear in print until his Carols, Hymns and Song in 1863. Hopkins composed the song in Williamsport, Pennsylvania, where he was a pastor at Christ Episcopal Church (which still stands at the corner of Fourth and Mulberry Streets).
Ensemble: The Mormon Tabernacle Choir
Period: 19th Century
Written: 1857; USA
Jingle Bell Rock / Bobby Helms 1957, 2:12
HW: email (or hard copy) me at gmsmith@shanahan.org.
Prayer
Current Events:
Cf. http://www.bloomberg.com/video/64960242/
Dec. 2 (Bloomberg) -- Robert Eisenbeis, chief monetary economist at Cumberland Advisors, discusses the Federal Reserve's report on users of its $3.3 trillion in emergency programs. Eisenbeis speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
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:
URL: http://nie.philly.com
Click on the words "Access e-Inquirer" located on the gray toolbar underneath the green locker on the opening page.
Login:
Username: bshsinky@shanahan.org
Password: 10888
The electronic editions will be archived at the site for 30 days only.
The Supply and demand game is helpful in applying the basics we have learned about supply and demand.
Vocabulary eFlashcards
Show Business is the Federal Reserve Bank of Boston's learning activity on economics and the entertainment industry. The goal is to provide an additional tool for teaching and learning about basic economic concepts, with some economic history snuck in.
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
Supply and Demand Screen shot 2, Equilibrium
Supply and Demand Screen shot 3, Consumer Surplus
Supply and Demand Screen shot 4, Producer Surplus
Why It Matters
The Big Idea
Section 1 What is Demand?
ceteris paribus ([key-te-rees pah-ri-boos] other things being equal
Guide to Reading
Section Preview
Content Vocabulary
demand
microeconomics
market economy
demand schedule
demand curve
To get a better picture of demand, economists construct graphs. They try to find out how many people are willing to buy an item at various prices, and then plot that information on a graph like this.
You should note a couple of things about demand curves: 1) price is always plotted along the vertical axis and quantity is always plotted on the horizontal axis, and 2) demand curves always slope downward from left to right.
By now you should understand the primary reason demand curves always slope downward from left to right—as price falls, demand increases. But a second economic principle plays a role as well. The law of diminishing marginal utility tells us that individual demand for a good will decrease each time that good is purchased or consumed.
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?
Income influences demand. As our income changes, our willingness and ability to buy a product changes. When you were working for the minimum wage, you may have been willing and able to pay only 75¢ for a donut. But after your wage was doubled, your willingness and ability changed. Now you are willing and able to pay $1.25 and maybe $1.50 for a donut. And if for some reason income levels rise or fall more generally—say during a depression—the entire demand curve will shift. During good times the demand curve for donuts might look like this.
But suppose the bottom fell out of the stock market, the unemployment rate shot up, and the national average income dropped 15%. Our demand curve would shift to the left and look like this.
Want a good indicator of the income effect? How about yacht sales. Yachts are nice, of course. But they're not exactly necessities (for most of us, anyway).
Yacht sales are thus highly sensitive to the income effect.
In the first half of 2008, before the bottom fell out of the economy, 4,157 sailboats were sold in America.
In the first half of 2009, with the economy a mess and incomes falling, sales were 28% lower.
The Law of Demand
Okay—let’s start with a basic and simple fact: as the price of something falls, demand for it rises; and as the price of something rises, the demand for it falls. This is the law of demand and every kid who has ever sold lemonade, baseball cards, or Beanie Babies understands it. If the price of a good is cut in half, more people will buy it. If the price doubles, fewer people will buy it.
But the concept of demand is a bit more complicated than the law of demand. (Or at least economists like to make it sound more complicated.) So to make sure you don’t embarrass yourself at a cocktail party filled with economists (yeehaw), memorize this definition. Demand refers to the amount of a good or service that people are willing and able to buy at a specified price.
Demand refers to the amount of a good or service that people are willing and able to buy at a specified price.
There are a couple of key phrases in this definition—willing and able and specified price. To accurately gauge demand for a particular item we need to eliminate the willing but unable and the able but unwilling—in other words, there may be plenty of people with interest in our item but no money. And there may be people with plenty of money but absolutely no interest in the good. They should not be factored into our calculation of demand. Moreover, identifying a vague interest in a product is meaningless unless we can link that interest to a specific price. Sure, you may like what we are selling, and you may be willing and able to buy our product—but are you willing and able to pay $3? $4? $5?
Demand, therefore, means more to economists and businessmen than some vague, desire for something—it refers to the amount of a good or service that people are willing and able to buy at a specified price.
Consumer tastes may affect demand. Consumers may clamor for an item one year and ignore it the next. The clothing industry is particularly vulnerable to quickly changing tastes. How ready was the clothing industry for the abandonment of the polyester bell bottom complemented by a form-fitting butterfly collar shirt? How ready was the industry for the revival of these ridiculous clothes thirty years later?
Mott The Hoople, 1974
Every Christmas season, it seems, there is that one must-have item that everybody just needs to have under the tree. Manufacturers just can't make enough, stores run out of inventory, and desperate shoppers trample each other on Black Friday trying to get their hands on the precious, the precious.
Here are the best-selling must-haves of recent holiday shopping seasons:
Best Selling Christmas Items
2009
Nook eReader (Barnes & Noble)
2008
Elmo Live (Fisher Price)
2007
iTouch (Apple)
2006
Playstation 3 (Sony)
2005
Xbox 360 (Microsoft)
2004
RoboSapiens (WowWee)
2002-3
Beyblades (Hasbro)
2001
Bratz Dolls (MGA Entertainment)
2000
Razor Scooters (Razor USA)
market demand curve
marginal utility
diminishing marginal utility
Diminishing Marginal Utility, 4:15
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?
Economists use the word utility to describe the ability of a good or service to satisfy some want we possess. A donut has utility if it can satisfy our hunger; a movie has utility if it satisfies our desire for entertainment. Economists also recognize that the ability of a product to satisfy our want or need may diminish the more frequently it is consumed. The first donut you buy may do a great job of satisfying your hunger, the second may as well. But the third may be less satisfying to you, and you may be totally uninterested in the fourth. The once invaluable donut has lost much of its seductive appeal. We might call this the law of diminishing seductive appeal. But economists are a stodgy bunch, so they call this the law of diminishing marginal utility.
Now given our law of demand, we realize that if the donut vendor cuts his price, we may recover some interest. At half price, we might muscle-up for one more 417 calorie chocolate covered cholesterol enhancing treat. But even at a reduced price, utility will eventually diminish until prices drop again and then again and again.
The laws of demand and diminishing marginal utility combine to produce demand curves that predictably flow downward from left to right. The actual market price for a good may change, and that will trigger a change in the number of units sold, but the relationship between demand and price will remain constant—prices and demand will shift in sync with one another along the demand curve.
Economists refer to this sliding along the demand curve as movement. Movement occurs when changes in the market price for a good causes demand to slide up or down the curve—or when a change in the demand causes
prices to slide up or down the curve.
But economists also recognize the existence of certain factors that will cause the entire curve to shift—move either to the left or the right. Changes in income, consumer tastes or preferences, and in the price of substitution goods and complementary goods will prompt not just movement along the curve but a shift of the curve in one direction or the other.
Imagine you've been lost in the desert, wandering around in the blistering heat without water for days. Somehow you finally stumble into a roadside oasis, a gas station and mini-mart that has sweet, delicious water for sale. You'd probably give your left... leg for a bottle. Your demand for water is off the charts.
So you enjoy that first bottle of water. You no longer feel like you're about to die. Your lips are no longer cracked and dry, your throat no longer parched.
You're thinking about maybe buying a second bottle of water. But you don't need it. You'd pay a few bucks for it, sure, but it's no longer of nearly priceless value to you.
That's diminishing marginal utility.
Equilibrium Price
As useful (and fascinating) as supply and demand curves are on their own, they become even more valuable (and for economists, truly sublime) when combined. When we plot supply and demand for a product on the same graph, we discover how producers and consumers will interact in the marketplace—and where exactly they will converge.
Remember the demand curve looked like this.
And the supply curve looked like this.
Now look at what happens when we combine these graphs (and add a little curviness).
They intersect a t a certain point. They intersect at the price where the amount producers are willing and able to supply converges with the amount consumers are willing and able to purchase. This point of convergence is called the equilibrium price. Theoretically it is where supply and demand meet and prices settle. If suppliers ignore demand, and continue to produce units and price them too high, they will not be purchased. Instead they will sit in the warehouse. If they produce too few, demand will go unmet and consumers will clamor for more.
This clamoring for more goods might encourage new suppliers to enter the market. And as we noted above, the entrance of new competitors will increase supply. And when this occurs the market will settle on a new equilibrium price.
If factors such as the introduction of new technology or decreasing production costs shift the supply curve to the right (S2) or if other factors such as new government regulations or increasing production costs shift the supply curve to the left (S3) the market will produce a new equilibrium price.
Similarly, if demand shifts for any reason (the changing price of substitution or complementary goods, changing income, etc.) the market will generate a new equilibrium price.
What's the equilibrium point for an iPhone? Each time a new model comes out, it seems, Apple ends up with production shortages. That implies that the sticker price Apple is charging may be too low. But the company may have other reasons for selling below the equilibrium price... such as not wanting the price for the phones end up too high a few months later, once the initial frenzy has worn off.
Academic Vocabulary
prevail
inversely
Reading Strategy
Products in the News
Wrist Watch
An Introduction to Demand
Main Idea
Economics and You
Demand Illustrated
The Individual Demand Schedule
The Individual Demand Curve
Reading Check
Interpreting
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
Main Idea
Economics and You
Why We Call It a "Law"
The Market Demand Curve
Reading Check
Explaining
How does the market demand curve reflect the Law of Demand?
Demand and Marginal Utility
Main Idea
Economics and You
Reading Check
Describing
How does the principle of diminishing marginal utility explain the price we pay for another unit of a good or service?
HW email to gmsmith@shanahan.org or hand in hard copy.
