Price Determination in Markets Preparing to Teach HS Economics 2014.

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Presentation transcript:

Price Determination in Markets Preparing to Teach HS Economics 2014

Demand Demand schedule PQ $5 $4 $3 $2 $1 0 P Q $2 $3 $4 $5 * Change in price causes a move along the curve

Supply Supply schedule PQ $5 $4 $3 $2 $1 0 P Q $2 $3 $4 $5 * Change in price causes a move along the curve

DJ Econ: Demand & Supply Youtube Youtube

A Classroom Market for Cocoa Students are assigned to be buyers and sellers of cocoa Each student needs a score sheet and a buyer or seller card Enlist trusted students to distribute cards Tally sales prices during the activity

Sample Cards SAMPLE BUYER CARD You want to buy a unit of cocoa. You are willing and able to pay ______ for this unit, but you want to pay the lowest price you can. The lower the price you negotiate, the greater your gain. SAMPLE SELLER CARD You want to sell a unit of cocoa. This unit cost you ______ to produce, but you want to sell it for the highest price you can. The higher the price you negotiate, the greater your gain. From Lesson 4, High School Economics, 3 rd edition

Score Sheet Transaction Number Column A: Amount on Card Column B: Price Negotiated Column C: Gain or Loss (if Negative) From Lesson 4, High School Economics, 3 rd edition

Price per UnitRound 1Round 2Round 3 $18 $19 $20 $21 $22 $23 $24 $25 $26 $27 $28 $29 $30 $31 $32 $33 $34 $35 $36 $37 $38 From Lesson 4, High School Economics, 3 rd edition

Market Equilibrium Number of units of cocoa Price per unit Demand Supply From Lesson 4, High School Economics, 3 rd edition

Surpluses and Shortages Number of units of cocoa Price per unit DemandSupply From Lesson 4, High School Economics, 3 rd edition What prices would create a surplus of cocoa? What prices would create a shortage of cocoa?