1. Take Out Graphing Worksheet From Yesterday
Objective: Practice single and double shifts of the supply and demand curve to find the new market equilibrium price.
TE Skill: C-5 Demonstrate understanding of concept
TEST ON MONDAY

8. Lighting Practice Round
Each half of the room is a team
Each team will send one member up at a time to the white board
They will have one minute to draw the market for each event and show the shift of the curve, as well as the new equilibrium
You may support your team member from your seat
If one team finishes before the other-they get the point!
A different person from each team will come up every time
The side that win can earn an extra point if they can correctly name the shifter involved

9. Price of Rubber Increases Dramatically
Athletic Shoe Market

10. Movie Increases Popularity of Athletic Shoes
Athletic Shoe Market

11. Price of sports sandals drops drastically
Athletic Shoe Market

12. Two New athletic shoe companies enter the market
Athletic Shoe Market

13. Consumers worry prices of athletic shoes may increase next month
Athletic Shoe Market

14. Insects kill half the world’s tomato crop
Tomatoe Market

15. Recession hits-many consumers lose jobs
Movie Ticket Sales Market

16. Price of computer chips tumbles (needed to make computers)
Computer Market

17. Price of salmon skyrockets
Sea Bass Market

18. Government places excise tax on cigarettes to discourage smoking
Cigarette Market

19. Price of dvd players plummets
DVD Market

20. New, more efficient assembly line technology introduced
Only 12 examples, maybe add one more so that all students will participate
Automobile Market

21. McDonald’s opens up 3 new locations
Big Mac Market

22. Take Out Graphing Worksheet From Yesterday
Objective: Practice single and double shifts of the supply and demand curve to find the new market equilibrium price.
TE Skill: C-5 Demonstrate understanding of concept
TEST ON MONDAY

23. Four Single Shifts
Memorize
Demand , then P , and Q
Supply , then P , and Q
Supply , then P , and Q

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

25. To Sum Up:
If Demand and Supply are moving together (either increasing or decreasing), PRICE will be unknown
If Demand and Supply are moving opposite each other, QUANTITY will be unknown
*We have unknowns because we do not know by how much the curve is shifting

26. CHANGES IN BOTH SUPPLY AND DEMAND
If supply and demand decrease by the same amount, price will be unchanged and the quantity will decrease.
Explain the idea that the decrease or increase is ”by the same amount”.
Ask students to come to board or on their own paper to draw a market in equilibrium then decrease both the demand and supply curves to the same degree. Explain the cause and result. 26

27. CHANGES IN BOTH SUPPLY AND DEMAND
If supply decreases less than demand, price will decrease and quantity will decrease.
Ask students to come to board or on their own paper to draw a market in equilibrium then decrease the demand curve but decrease the supply curve to a less degree. Explain the cause and result. 27

28. CHANGES IN BOTH SUPPLY AND DEMAND
If supply decreases more than demand, price will increase and quantity will decrease.
Ask students to come to board or on their own paper to draw a market in equilibrium then decrease the demand curve but decrease the supply curves to a greater degree. Explain the cause and result. 28

29. CHANGES IN BOTH SUPPLY AND DEMAND
If supply increases and demand decreases, the price will decrease and the quantity will not change.
Ask students to come to board or on their own paper to draw a market in equilibrium then decrease both the demand and increase the supply curve to the same degree. Explain the cause and result. 29

30. Quantity of Video Games (thousands)
P increase Q same
Increase in Demand S1 S1 S1 S0 E1 E1 D0 E1
Price ($)
Pe1 E Pe
Now lets look at a leftward shift of the demand curve.
Suppose that video games and video game consuls are complimentary goods.
If the price for video game consul increases the demand for video games is going to decrease.
This leftward shift of demand will cause the price to fall from P to P1 and the Equilibrium Quantity from Q to Q1.
So when demand shifts to the left the Price will decrease and the Quantity will decrease.
The supply curve does not move no shift in supply however we move point to point along the supply curve meaning the quantity supply is moving. D1
Qe1 Qe
Quantity of Video Games (thousands)

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

32. Government Policies Price controls
Price ceiling: a legal maximum on the price of a good or service. Example: rent control.
Price floor: a legal minimum on the price of a good or service. Example: minimum wage.

33. EXAMPLE 1: The Market for ApartmentsQ
Rental price of apts S D
$800
300
Eq’m w/o price controls
Quantity of apartments

34. How Price Ceilings Affect Market Outcomes
A price ceiling above the equilibrium price is not binding – it has no effect on the market outcome. P Q S
Price ceiling
$1000 D
$800
300

35. How Price Ceilings Affect Market Outcomes
The equilibrium price ($800) is above the ceiling and therefore illegal.
The ceiling is a binding constraint on the price, and causes a shortage. P Q S D
$800
Price ceiling
$500
250
400
shortage

36. EXAMPLE 2: The Market for Unskilled LaborW L
Wage paid to unskilled workers S D $4
500
Equilibrium w/o price controls
Quantity of unskilled workers

37. How Price Floors Affect Market Outcomes
A price floor below the equilibrium price is not binding – it has no effect on the market outcome. W L S D $4
500
Price floor $3

38. How Price Floors Affect Market Outcomes
labor surplus
The equilibrium wage ($4) is below the floor and therefore illegal.
The floor is a binding constraint on the wage, and causes a surplus (i.e., unemployment). W L S
Price floor $5 D
400
550 $4

39. Price floors & ceilingsQ P S
The market for hotel rooms D
Determine effects of:
A. $90 price ceiling
B. $90 price floor
C. $120 price floor 39

40. The market for hotel rooms
A. $90 price ceiling Q P S
The market for hotel rooms D
The price falls to $90.
Buyers demand 120 rooms, sellers supply 90, leaving a shortage.
Price ceiling
shortage = 30 40

41. The market for hotel rooms
B. $90 price floor Q P S
The market for hotel rooms D
Eq’m price is above the floor, so floor is not binding.
P = $100, Q = 100 rooms.
Price floor 41

42. The market for hotel rooms
C. $120 price floor Q P S
The market for hotel rooms D
The price rises to $120.
Buyers demand rooms, sellers supply 120, causing a surplus.
surplus = 60
Price floor 42

43. Effects of Price Controls
Prices are the signals that guide the allocation of society’s resources. This allocation is altered when policymakers restrict prices.
Price controls are often intended to help the poor, but they often hurt more than help them:
The min. wage can cause job losses.
Rent control can reduce the quantity and quality of affordable housing.