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3	How much will a person pay for an item? It all depends how much UTILITY It has for them.
4	"When you’re craving chocolate" When you’re craving chocolate, how much is a Hershey bar worth?
5	"The addition of each new..." The addition of each new unit of a good or service brings less satisfaction or utility than the one before.
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7	A Demand Schedule to Show the demand for an item at various prices.
8	Reading a Demand Schedule
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10	Now, YOU create a demand curve for togos.
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12	What Is the Law of Demand?
13	"They will get less utility/satisfaction..." They will get less utility/satisfaction for their money when price rises. They may find another product or service for less opportunity cost if the price rises.
14	The Demand Schedule A demand schedule is a table that lists the quantity of a good a person will buy at each different price. A market demand schedule is a table that lists the quantity of a good all consumers in a market will buy at each different price.
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16	Does it look like this? A demand curve is a graphical representation of a demand schedule. When reading a demand curve, assume all outside factors, such as income, are held constant.
17	Quantity Demanded (Qd) Is shown as one point on the demand line that shows how much of a good or service will be purchased at that certain price.
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20	"According to this demand graph" According to this demand graph, what happens to the Qd of pizza rolls when the price changes from $2 to $3?
21	"Ceteris paribus is a Latin..." Ceteris paribus is a Latin phrase economists use meaning “all other things held constant,” besides price. The law of demand is accurate only as long as the ceteris paribus assumption is true. Ceteris paribus explains change in quantity demanded (Qd) when price changes. It is movement along ONE demand curve.
22	But what about situations where demand changes for reasons other than price?
23	Shifts in Demand When the ceteris paribus assumption is dropped, movement no longer occurs along the demand curve. Rather, the entire demand curve shifts. It looks like this.
24	Demand shifts…... To the LEFT if it decreases.
25	Demand shifts…... To the Right if it increases.
26	"Show the shift in demand..." Show the shift in demand for pizza rolls at Lake Superior pizza after subway opens a shop nearby using the data on this demand schedule.
27	Demand shifts…... To the LEFT if it decreases.
28	What factors cause a shift in demand?
29	1. Changes in population When population increases, demand also usually increases. When population falls, demand decreases.
30	When K.I.Sawyer closed... The population dropped in Marquette County and less meals were served at local restaurants.
31	2. Changes in Income INCOME: Changes in consumers incomes affect demand. If incomes riseand prices remain the same demand will increase. If income falls and prices remain the same, demand will decrease.
32	When people received their tax refunds... The demand for movie tickets increased at GKC.
33	When incomes go down, the demand for inferior goods rises. A normal good is a good that consumers demand more of when their incomes increase. An inferior good is a good that consumers demand less of when their income increases.
34	3. Changes in taste and preference. What people like determines what they buy. As items become popular, demand rises. As items lose popularity, demand falls.
35	When CD’s produced better quality recordings than cassettes... The demand for CDs increased.
36	When Oprah discussed mad cow disease on her show... The demand for beef decreased significantly.
37	5. Complementary Goods When two goods are complementary products, the rise in the price of one, will lower the demand for its complement. Or,the fall in a price of one will increase the demand for its complement.
38	When farmers had a record year for tomatoes and the price of spaghetti sauce decreased... The demand for pasta increased.
39	4. Availability of Substitutes Substitution is the availability of similar items to satisfy the same need if the price of one rises, people will buy the other one. Example: If the price of butter goes up, people will buy margarine instead...OR...if the price of going to the movies goes up, people will stay home and rent videos instead. If income goes up, sometimes people with buy the higher priced items.
40	When the price of movie tickets increased... The demand for video rentals increased.
41	"How will a change in..." How will a change in price affect demand?
42	What Is Elasticity of Demand? Demand for a good that consumers will continue to buy despite a price increase is inelastic. Demand for a good that is very sensitive to changes in price is elastic.
43	"Demand" Demand, raise your right hand! (Clap, clap) Supply, let your left hand fly! (Clap, Clap)
44	"What is the law of..." What is the law of supply? What are supply schedules and supply curves? What is elasticity of supply? What factors affect elasticity of supply?
45	Supply The willingness and ability to provide goods and services at different prices.
46	At a price of $.10 each… How many cookies would you be willing to bake to sell?
47	What if the price was $.50 per cookie… Now, how many would you be willing to sell?
48	Just say, cookies were selling for $1.00 each… Now how many would you be willing to bake to sell?
49	Law of Supply Generally: as $ rises; the quantity supplied rises. as $ falls; the quantity supplied falls.
50	Supply Schedule $ Quantity 5.00 5 million 4.00 4 million 3.00 3 million 2.00 2 million 1.00 1 million
51	Law of Supply Generally: as $ rises; the quantity supplied rises. as $ falls; the quantity supplied falls.
52	Supply Curve $ 5 4 3 2 1 0 1 2 3 4 5 6 7 8 (millions of pieces of pizza)
53	Change in Quantity Supplied When the pizza went from $3.00 to $4.00 per slice; the quantity supplied changed from 3 million to 4 million, because more pizza suppliers wanted to produce pizza to sell at the higher price. Change in price changes quantity supplied.
54	Change in quantity supplied… Is always due to PRICE
55	Supply Curve $ 5 4 S2 3 S1 2 1 0 1 2 3 4 5 6 7 8 (millions of pieces of pizza)
56	Practice: Create a supply curve for this supply schedule.
57	Show a change in quantity supplied as price changes from $1.00 to $2.00.
58	Market Supply schedule (combined firms) Draw this curve…
59	Show how quantity supplied changes with price change from $2.00 to $3.00.
60	"How quickly will quantity supply..." How quickly will quantity supply change when price changes?
61	Shift in Supply happens when: 1. Firms enter or leave the market 2. Input costs change 3. Technology costs 4. Subsidies by the government 5. Taxes 6. Regulations by the government 7. Expectations of future prices
62	Change in supply looks like this…
63	Supply Curve Change: Firms enter/exit the industry. Two new pizza places open in Marquette. $ 5 4 3 2 1 S1 1 2 3 4 5 6 7 8 After the new pizza shops open how many pizzas will be supplied at $4.00 compared to before?
64	Supply Curve Change: Input cost Flour prices increase and it now costs more to produce pizza. $ S2 5 4 3 2 1 S1 1 2 3 4 5 6 7 8 (millions of pieces of pizza) After the flour price increase, how many slices of pizza will be supplied at $4.00 compared to before?
65	Supply Curve Change:Technology A new crust maker allows 1 employee to make twice as many pizzas as before in the same amount of time.(S3) $ 5 4 3 2 1 S1 1 2 3 4 5 6 7 8 After the new technology how many pizzas will be supplied at $4.00 compared to before?
66	Supply Curve Change: Subsidies The government pays dairy farmers $.25 for every gallon of milk they produce. $ 5 4 3 2 1 S1 1 2 3 4 5 6 7 8 After the subsidy, how many be supplied at $4.00 compared to before?
67	Supply Curve Change: Taxes The government levies a tax on all foreign steel, including that used by Ford for their vehicles. $ 5 4 3 2 1 S1 1 2 3 4 5 6 7 8 After the new tax, what will happen to the supply of new Ford cars?
68	Supply Curve Change: Expectations of future prices. Due to the hurricane in Florida, the orange crop in many areas was destroyed. $ 5 4 3 2 1 S1 1 2 3 4 5 6 7 8 After the announcement of this news, what will happen to the market for frozen orange juice?
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71	"Demand" Demand, raise your right hand! (Clap, clap) Supply, let your left hand fly! (Clap, Clap) Cross both of them, To find equilibrium!
72	Supply and Demand Together The Story of Sam the Supplier and Conrad the Consumer
73	Sticks selling at $20.00 Hi Sam, I’ll take two hockey sticks @ $20.00 each.
74	Graph looks like this.
75	Sam decides to raise price to $25 Sorry, Sam. I planned to buy another hockey stick, but at that price, I’m going to go to another store, cause I know I can get it cheaper there.
76	Graph looks like this. (Change in quantity supplied from A to B
77	Graph looks like this. (Change in quantity supplied from A to B
78	Sam drops his price back to $20 to stay competitive.
79	Everyone gets raises (Change in demand due to change in income) Sam, We all got raises at work, so I’ll take four sticks. (Income) Sorry, Conrad, I’ve run out of sticks. So many people are buying them, I can’t keep enough on the shelves.
80	Graph looks like this.
81	(As demand goes up, a shortage results, which then drives the equilibrium price up.
82	$ Wow, With the price that high, I am going to find more sticks to sell.
83	Graph looks like this. Sam increases production, and other stores do also, so the supply shifts to the right as more are produced.
84	As supply shifts right, equilibrium price (EP) falls, so Sam can sell more sticks, but has to reduce his price.
85	Supply & Demand together: Tacos become popular and pizza demand falls. $ 5 S1 4 3 2 1 0 1 2 3 4 5 6 7 8 (millions of pieces of pizza) What happens to price?
86	Supply&Demand together: Bad year for tomatoes increases cost of pizza sauce. $ 5 S2 4 3 2 0 1 2 3 4 5 6 7 8 (millions of pieces of pizza)
87	Supply&Demand together:What will happen if technology produces cheaper baking costs for pizza ovens??? $ 5 S1 4 3 2 1 0 1 2 3 4 5 6 7 8 (millions of pieces of pizza)
88	Supply&Demand together:Now suppose demand for pizza skyrockets as Marquette’s population increases when a factory is set up at the air base. $ 5 4 3 2 1 1 2 3 4 5 6 7 8 (millions of pieces of pizza)
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91	"Are enacted when the government..." Are enacted when the government thinks that prices are unfair to buyers or sellers. Example: When rents are so high a group of people cannot afford housing.
92	"The maximum price that can..." The maximum price that can be charged for a good or service.
93	Price Ceilings can create shortages. A shortage exists when demand is greater than supply.
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97	"…when the government requires..." …when the government requires a minimum amount be paid for a good or service. A surplus exists when supply is greater than demand.
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100	"When you’re craving chocolate" When you’re craving chocolate, how much is a Hershey bar worth?
101	"The addition of each new..." The addition of each new unit of a good or service brings less satisfaction or utility than the one before.