MARKET IN WHEAT Essential Skill: Demonstrate Understanding of Concepts Objective: To understand how supply and demand work together in a market

Take the Worksheet from the front ■Read over the instructions for this activity BUYERS: WANT TO PAY LESS THAN THE AMOUNT ON YOUR CARD TO MAKE A PROFIT SELLERS: WANT TO GET MORE THAN THE PRICE ON YOUR CARD TO MAKE A PROFIT

Hints! ■More transactions = More chances at profit. You must buy and sell each round ■You should not let other students see your card ■You can only have one card at a time ■You do not have to make a profit with every transaction. Win the war, not all the battles. ■Check in on the class transactions tally to see what wheat is going for these days! ■You can pick your prices, just make sure that they are whole dollar amounts

BUY AND SELL! ROUND 1 ROUND 2 ROUND 3

What your graph should look like: 1.At what price was wheat most frequently sold in each round? 2. Why did the prices become more clustered together in the later rounds? 3. Did buyers or sellers determine the price for wheat? 4. How did competition among the sellers and the buyers influence the price?

Bottom Line of Supply and Demand ■The price of nearly everything that you buy is determined by the interaction of supply and demand. Supply and demand also determine the quantity of goods and services that are bought and sold in a market.

Putting it Together ■To determine price, we put both the supply and demand curve together on the same graph ■Next we establish an equilibrium price: point at which the quantity supplied equals the quantity demanded ■Equilibrium is found at the point where the two lines intersect

Shortage

Surplus

Each curve can shift: Single Curve Shifts

Four Single Shifts ■Memorize 1.Demand, then P, and Q 2.Demand, then P, and Q 3.Supply, then P, and Q 4.Supply, then P, and Q

Price ($) A S0S0 Quantity of Video Games (thousands) D1D1 Increase in Demand D0D0 B

Price ($) E1 Quantity of Video Games (thousands) 0 Qe1 Qe D0D0 Decrease in Demand D1D1 Pe1 Pe S1S1 E

E1 Increase in Supply Quantity of Video Games (thousands) $ D0D0 S1S1 S0S0 E Price ($)

E Decrease in Supply Quantity of Video Games (thousands) $ D0D0 S1S1 S0S0 E1 Price ($)

U7m-c Practice Single Shifts Worksheet

Dual Shifts-When both curves move D S P ? Q D S P Q? D S P Q? D S P ? Q

CHANGES IN BOTH SUPPLY AND DEMAND If supply and demand decrease by the same amount, price will be unchanged and the quantity will decrease.

CHANGES IN BOTH SUPPLY AND DEMAND If supply decreases less than demand, price will decrease and quantity will decrease.

CHANGES IN BOTH SUPPLY AND DEMAND If supply decreases more than demand, price will increase and quantity will decrease.

CHANGES IN BOTH SUPPLY AND DEMAND If supply increases and demand decreases, the price will decrease and the quantity will not change.

Practice ■Take a worksheet from the front to practice double shifts. There will also be examples of single shifts