Presentation on theme: "Complete the elasticity problems and turn in.. Show your work. Ed = the product’s elasticity as a number. Based on the number, is the product elastic or."— Presentation transcript:
Complete the elasticity problems and turn in.. Show your work. Ed = the product’s elasticity as a number. Based on the number, is the product elastic or inelastic. Example a.Ed = 4 b.Elasticity = elastic The questions that go with the graphs. 1.First calculate the total revenue at each price and then based on the change in TR decide whether the product is elastic or inelastic 2.Use the total revenue test we discussed yesterday
YESTERDAY WE SAID … IF PRICE GOES DOWN …. The quantity demanded goes up And vice versa
SPEAKING IN PRECISE TERMS AS AN ECONOMIST…. “ A “change in quantity demanded” means there has been a change in …… The price of the product This is illustrated graphically by movement up and down the demand curve
A “change in demand” means.. A nonprice factor (determinant) has caused demand to increase or decrease
5 Determinants of Demand T I M E R ASTES NCOME ARKET SIZE XPECTATIONS ELATED GOODS, PRICE OF
Chevy Trucks and Ford Trucks are Substitute Goods If the price of Chevy Trucks goes up the demand for Ford Trucks will Go Up Paint and paint brushes are…. Complementary goods If the price of paint goes down, the demand for paint brushes … Goes up
A CHANGE IN DEMAND IS SHOWN GRAPHICALLY BY … A SHIFT IN THE DEMAND CURVE IF THE DEMAND CURVE SHIFTS TO THE RIGHT THEN DEMAND HAS… INCREASED IF THE DEMAND CURVE SHIFTS TO THE LEFT THEN DEMAND HAS DECREASED
Complete the following on your own sheet of paper In the following scenarios, determine if a change in quantity demanded or a change in demand has taken place and indicate if the change is increasing or decreasing demand. Create graphs for each one. 1.Oprah selects your book as her “Book of the Month.” Congrats. Create a graph for your book. 2.Dell computer has a “sale of the century” on their pc’s. Apple sales suffer. Create graphs for Dell and Apple. 3.Prom tickets get very, very expensive. Limo services suffer. Create graphs for prom tickets and limo services. 4.Cheerios is proven to lower cholesterol. Baby Boomers can’t get enough of them. Create a graph for cheerios 5.Home Depot has a sale on their plants and flowers. Customers pick up plant fertilizer while they are at it. Create graphs for plants/flowers and one for fertilizer. 6.There is an e-coli breakout at the local Jack-In-The – Carton restaurants. Create a graph for their meals.
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