1. 1.08 – HDW work with graphs in economics

2. HW Review
Do Now

6. Normal Line Graphs Horizontal axis – independent variable
Vertical axis – dependent variable
Read graph from LEFT to RIGHT (like a book!)

13. The Main Graph in Econ
Supply and Demand Curves
Read differently

14. How much would you pay for…
An “A” on the next test?

15. Predicting prices
Who would benefit from being able to predict changes in prices?
Buyers
Sellers
Speculators
Who would benefit from being able to predict changes in quantities sold?

16. We will begin by analyzing competitive markets
-- markets in which there are many buyers and many sellers of the same product or service.
The key feature is that no individual’s actions have a noticeable effect on the price at which a good or service is sold.
Later in the course we will study other types of market structures such as oligopolies, monopolies and monopolistic competition.

17. The foundation of market analysis: Supply and demand model
-- model of how a competitive market works
This model will help us answer questions such as “How will an increase in gas price effect the price and quantity of SUVs sold?”

18. The demand Schedule
List of prices of a good/service and associated quantities demanded at those prices.
Using the data in the demand schedule, a Demand Curve is a graph that depicts the points in the demand schedule.
What type of relationship do you expect between price and quantity?
INVERSE!!!!! (negative correlation)

19. The law of demand
A higher price of a good, other things being equal, leads people to demand a smaller quantity of the good.

20. A change from one point on this curve to another
point on this curve is called a change in quantity
demanded.
Figure 3-1 The Demand Schedule and the Demand Curve Krugman and Wells: Microeconomics Copyright © 2005 by Worth Publishers

21. Talking about reading a demand curve
Use economic handbook visuals
Discuss how it is a change in price that drives everything.
Interpret points on the demand curve
A change in price changes “quantity demanded”
Maybe use grebes

24. Issues in Interpreting Graphs
Features in Graph Construction:
Consistent Scale
Area Principle
Truncated Scale
The Effect of Scale (size of increments can affect visual interpretation of data)