Presentation on theme: "Imagine you sell computers… A Lenovo Laptop has a price tag of $800, but no one is buying it. What do you do? Why?"— Presentation transcript:
Imagine you sell computers… A Lenovo Laptop has a price tag of $800, but no one is buying it. What do you do? Why?
Objective: Explain and graph shortages, surpluses, and equilibrium prices; analyze market prices Guiding Question: How can buyers get the best possible deal and sellers still make the most money possible?
Imagine that a new type of digital camera hits the marketplace. At $125, producers supply a large number of cameras, but only half are sold. The next week, the price is reduced to $85, and the cameras are all gone in the middle of the week with people asking for more. The following week, the price is increased to $105 and almost all the cameras that were supplied are sold. At $125, there was a surplus of cameras At $105 per camera, the market was in equilibrium At $85 there was a shortage
A surplus occurs when the quantity supplied is more than the quantity demanded (Qs > Qd) When there is a surplus: lower price $75 100200 What is the Qs when iPods are $75? What about the Qd?
A shortage happens when the quantity supplied is less than the quantity demanded (Qs < Qd) When there is a shortage: you can raise the price $25 100200 What is the Qs when iPods are $25? What is the Qd?
Equilibrium is the condition when the quantity supplied equals the quantity demanded (Qs = Qd) Equilibrium is like a magnet, there is always pressure to move to this point Sellers want to sell iPods for $50 because they can sell more and buyers like it because it is cheaper
Quantity Supplied is 400, Quantity Demanded is 200 Quantity Supplied is 150, Quantity Demanded is 200 Quantity Supplied is 75, Quantity Demanded is 75 Quantity Demanded is 200, Quantity Supplied is 140 Quantity Supplied is 15, Quantity Demanded is 10 Surplus of 200 Equilibrium Shortage of 50 Shortage of 140 Surplus of Five
DEMAND SCHEDULE PriceQd $15400 $20325 $25250 $30175 $35 SUPPLY SCHEDULE PriceQs $15300 $20330 $25360 $30390 $35 Use the supply and demand schedules above to create one demand curve showing both data-sets. Remember your labels! Challenge: figure out the mathematical sequence in each schedule and add the final answer to your graph. (When the price is $35, what is the supply? The demand?)