1. APK: Activation of Prior Knowledge Write at least 3-5 sentences describing a time when… you were willing to pay any financial price for a good or service no matter how expensive or you were not willing to pay any financial price for a good or service because it was too expensive. Question[s] of the Day How and why are the prices of goods and services important? How does an equilibrium price occur?

2. Effects on the price of goods Economics Michael Quinones, NBCT www.socialstudiesguy.com

3. Key vocabulary terms: Describe and explain the following as completely as possible using Cornell notes Supply Demand Law of supply and demand Shortage Surplus Equilibrium Price Inflation Deflation

4. Economic Terms Supply-The amount or quantity of a good or service that is available for purchase and use. Demand-The desire or want for an item.

5. Aftermath of Supply and Demand Surplus: excess product that results when supply exceeds demand. Shortage: lack of product that results when demand exceeds supply.

6. Equilibrium Price As we have just seen, demand increases when prices decline and decreases when price goes up [from the perspective of a consumer]. As we have just seen, demand increases when prices decline and decreases when price goes up [from the perspective of a consumer]. The available, willing quantity of a supply from a seller increases as price increases and decline as price decline. The available, willing quantity of a supply from a seller increases as price increases and decline as price decline. However, there is a point where supply and demand meet this is called the price equilibrium or equilibrium price. However, there is a point where supply and demand meet this is called the price equilibrium or equilibrium price.

7. Equilibrium Price

8. Law of Supply and Demand: Equilibrium Price Law of Supply and Demand: Equilibrium Price Demand increases when prices decline. Demand increases when prices decline. Demand decreases when prices increase. The situation above is known as the Law of demand because it is something that occurs over and over again. Demand decreases when prices increase. The situation above is known as the Law of demand because it is something that occurs over and over again. The available and willing quantity of a supply of goods from a seller increases as prices increases. The available and willing quantity of a supply of goods from a seller increases as prices increases. The available and willing quantity of a supply of goods from a seller decreases as prices decrease. The situation above is known as the Law of supply because it is something that occurs over and over again. The available and willing quantity of a supply of goods from a seller decreases as prices decrease. The situation above is known as the Law of supply because it is something that occurs over and over again. Reason? Reason? Sellers want to earn the highest profit possible. Sellers want to earn the highest profit possible. There is a point when supply and demand meet this is called the price equilibrium or equilibrium price. There is a point when supply and demand meet this is called the price equilibrium or equilibrium price. The equilibrium price also known as the market price is the point when sellers and buyers are both satisfied with the price of a good. The equilibrium price also known as the market price is the point when sellers and buyers are both satisfied with the price of a good.

9. Inflation  Has nothing to do with putting air into tires or balloons!  A decrease in the purchasing power of money.  Simply put inflation is when your money is less valuable than it was before.  This can happen quickly or gradually [over time].

10. Charting inflation over time

11. Inflation  Causes: No single answer exists to answer why inflation occurs.  What are some reasons?  Monetary theory: Artificial increase in money supply [when the government prints too money].  “Supply shock”: Unpredictable changes to goods/services such as oil, water or food.

12. Deflation  The opposite of inflation.  An increase in the buying power of money (falling prices).  Assets (items of value) decrease in value for several reasons.

13. Deflation  Causes: No single answer exists to answer why deflation occurs.  Governments can artificially decrease money supply.  Reaction to over valuation of assets or speculation (corporate greed).

14. Effects  Lower prices may mean lower profits for companies.  Lower money supplies may mean lower wages.

15. Content Frame: Copy and Complete Economically speaking, supply is best described as _____________________. Demand is best described as _________________________. A _________ very often impacts the price goods ________ because of a lack of supply. A _________ very often impacts the price of goods ________ because of an excess of supply. The Law of Supply and Demand is best described as _________________________________ ____________________________________________. An equilibrium price occurs when _________________ _______________________________. __________ because of price increases lowers consumers’ buying power. _________ may seem good for consumers due to lower prices but it can lead to higher unemployment rates and eventually an inability to pay for those lower cost goods and services.

16. Sources  http://www.cardcow.com/images/a-paper- shortage-outhouse-comic-funny-37470.jpg http://www.cardcow.com/images/a-paper- shortage-outhouse-comic-funny-37470.jpg http://www.cardcow.com/images/a-paper- shortage-outhouse-comic-funny-37470.jpg  http://www.surplus.cc/Images/surplus.jpg http://www.surplus.cc/Images/surplus.jpg  http://people.hofstra.edu/geotrans/eng/ch7e n/meth7en/img/supplydemandprice.gif