1. SUPPLY AND DEMAND (3.4.2) Begin End ShowTable of Contents Copyright © 2013 N.S.

2. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. Table of Contents A Fish Market “Equilibrium” Learning Targets Equilibrium “Equilibrium” Learning Targets What If Prices Are Too High? What If Prices Are Too Low? When Demand & Supply Change When Demand Changes When Supply Changes Access Prior Knowledge Set Goals New Information Conclusion Equilibrium In the News Activity

3. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. A Fish Market GAME DESCRIPTION Every day, just before dawn, at fish markets around the world, fishermen haggle over prices with restaurant owners. These are remarkable and chaotic spectacles. The most remarkable thing about it, however, may be that just about every buyer finds a willing seller and vice versa. This is because the price of each type of fish quickly converges to an equilibrium point where quantity supplied equals quantity demanded. In order to see how this happens, the classroom has been turned into a fish market. Part of the class are fishermen (sellers), who want to make money from their morning catch. The other part of the class are restaurant managers (buyers), who seek to provide quality and diversity to their restaurant’s menu for the day. Both buyers and sellers are trying to maximize their profits. Prizes will be given out for achieving each of the following. 1) Buyers with a profit of at least $20. 2) Sellers with a profit of at least $20. 3) Buyer who can achieve the widest variety of seafood (and still have a profit). 4) Seller with the least leftover product (and still have a profit). Tally Sheet And Graph

4. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. A Fish Market To enter data into this spreadsheet, click “End Show” and then double click the image.

5. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. “Equilibrium” Learning Targets Reasoning Describe how the market equilibrium price and quantity are determined. Reasoning Determine the effects on equilibrium price and quantity when demand and/or supply shift. Skill Draw shifts in supply and demand curves.

6. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. Equilibrium 1) In competitive markets, equilibrium has been reached when the quantity demanded equals the quantity supplied. Graph It

7. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. Equilibrium 1) In competitive markets, equilibrium has been reached when the quantity demanded equals the quantity supplied. Graph It Equilibrium

8. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. Equilibrium 1) In competitive markets, equilibrium has been reached when the quantity demanded equals the quantity supplied. 2) Because all buyers get what they want without any leftover goods, equilibrium is called the “market-clearing price.” Graph It

9. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. Equilibrium 1) In competitive markets, equilibrium has been reached when the quantity demanded equals the quantity supplied. 2) Because all buyers get what they want without any leftover goods, equilibrium is called the “market-clearing price.” Graph It Market-Clearing Price ($40) Exactly 30 crates are supplied and exactly 30 are purchased

10. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. Equilibrium 1) In competitive markets, equilibrium has been reached when the quantity demanded equals the quantity supplied. 2) Because all buyers get what they want without any leftover goods, equilibrium is called the “market-clearing price.” 3) Markets move toward equilibrium due to competition and availability of information. Graph It

11. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. What If Prices Are Too High? 1) If prices are above equilibrium, there is more supply than demand. Graph It

12. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. What If Prices Are Too High? 1) If prices are above equilibrium, there is more supply than demand. Graph It Supply is 40 But demand is only 20 At $44

13. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. What If Prices Are Too High? 1) If prices are above equilibrium, there is more supply than demand. 2) When supply exceeds demand, there is a surplus. Graph It At $44

14. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. What If Prices Are Too High? 1) If prices are above equilibrium, there is more supply than demand. 2) When supply exceeds demand, there is a surplus. Graph It Surplus of 20 At $44

15. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. What If Prices Are Too High? 1) If prices are above equilibrium, there is more supply than demand. 2) When supply exceeds demand, there is a surplus. 3) In order to get rid of surplus quantity, the seller must lower the price. Graph It Surplus of 20 At $44

16. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. What If Prices Are Too High? 1) If prices are above equilibrium, there is more supply than demand. 2) When supply exceeds demand, there is a surplus. 3) In order to get rid of surplus quantity, the seller must lower the price. Graph It Equilibrium

17. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. What If Prices Are Too Low? 1) If prices are below equilibrium, there is less supply than demand. Graph It

18. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. What If Prices Are Too Low? 1) If prices are below equilibrium, there is less supply than demand. Graph It Demand is 40 But supply is only 20 At $36

19. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. What If Prices Are Too Low? 1) If prices are below equilibrium, there is less supply than demand. 2) When supply is less than demand, there is a shortage. Graph It At $36 Graph It

20. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. What If Prices Are Too Low? 1) If prices are below equilibrium, there is less supply than demand. 2) When supply is less than demand, there is a shortage. Graph It Shortage of 20 At $36 Graph It

21. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. What If Prices Are Too Low? 1) If prices are below equilibrium, there is less supply than demand. 2) When supply is less than demand, there is a shortage. 3) With so many buyers, sellers will realize they can make more money by increasing price. Graph It At $36 Graph It Shortage of 20

22. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. What If Prices Are Too Low? 1) If prices are below equilibrium, there is less supply than demand. 2) When supply is less than demand, there is a shortage. 3) With so many buyers, sellers will realize they can make more money by increasing price. Graph It Equilibrium Graph It

23. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand Changes 1) When demand increases, it will almost always be true that a) Price increases b) Quantity increases Graph It

24. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand Changes 1) When demand increases, it will almost always be true that a) Price increases b) Quantity increases Graph It D2D2 $44 40

25. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand Changes 1) When demand increases, it will almost always be true that a) Price increases b) Quantity increases 2) When demand decreases, it will almost always be true that a) Price decreases b) Quantity decreases Graph It

26. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand Changes 1) When demand increases, it will almost always be true that a) Price increases b) Quantity increases 2) When demand decreases, it will almost always be true that a) Price decreases b) Quantity decreases Graph It D2D2 $36 20

27. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Supply Changes 1) When supply increases, it will almost always be true that a) Price decreases b) Quantity increases Graph It

28. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Supply Changes 1) When supply increases, it will almost always be true that a) Price decreases b) Quantity increases Graph It S2S2 $36 40

29. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Supply Changes 1) When supply increases, it will almost always be true that a) Price decreases b) Quantity increases 2) When supply decreases, it will almost always be true that a) Price increases b) Quantity decreases Graph It

30. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Supply Changes 1) When supply increases, it will almost always be true that a) Price decreases b) Quantity increases 2) When supply decreases, it will almost always be true that a) Price increases b) Quantity decreases Graph It S2S2 $44 20 Graph It

31. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases Why Is Price Unknown?

32. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases Why Is Price Unknown?

33. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases Why Is Price Unknown?

34. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases Why Is Price Unknown?

35. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases Why Is Price Unknown?

36. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases Why Is Price Unknown?

37. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases Why Is Price Unknown?

38. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases Why Is Price Unknown?

39. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases Why Is Price Unknown?

40. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases Why Is Price Unknown?

41. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases Why Is Price Unknown?

42. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases Why Is Price Unknown?

43. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases Why Is Price Unknown?

44. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases Why Is Price Unknown?

45. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown Why Is Quantity Unknown?

46. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown Why Is Quantity Unknown?

47. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown Why Is Quantity Unknown?

48. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown Why Is Quantity Unknown?

49. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown Why Is Quantity Unknown?

50. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown Why Is Quantity Unknown?

51. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown Why Is Quantity Unknown?

52. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown 4) Demand decreases and supply increases a) Price decreases b) Quantity is unknown Why Is Quantity Unknown?

53. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown 4) Demand decreases and supply increases a) Price decreases b) Quantity is unknown Why Is Quantity Unknown?

54. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown 4) Demand decreases and supply increases a) Price decreases b) Quantity is unknown Why Is Quantity Unknown?

55. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown 4) Demand decreases and supply increases a) Price decreases b) Quantity is unknown Why Is Quantity Unknown?

56. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown 4) Demand decreases and supply increases a) Price decreases b) Quantity is unknown Why Is Quantity Unknown?

57. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown 4) Demand decreases and supply increases a) Price decreases b) Quantity is unknown Why Is Quantity Unknown?

58. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. When Demand & Supply Change 1) Demand increases and supply increases a) Price is unknown b) Quantity increases 2) Demand decreases and supply decreases a) Price is unknown b) Quantity decreases 3) Demand increases and supply decreases a) Price increases b) Quantity is unknown 4) Demand decreases and supply increases a) Price decreases b) Quantity is unknown Why Is Quantity Unknown?

59. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. Equilibrium In the News DIRECTIONS Several real newspaper headlines from cnn.com are listed below along with a small excerpt from the story. Each story illustrates a change in supply, a change in demand, or a change in both. For each question determine which market is being described, decide how supply and/or demand is affected, and draw the change on the graph. After you have drawn the graph, determine how price and quantity have been affected. 1) EXPERTS: $4 A GALLON GAS COMING SOON 2) BARNES & NOBLE’S NOOK FLOPS DURING HOLIDAYS 3) BEATING THE COMING WATER SHORTAGE 4) EPA STUDY SUPPORTS MORE NATURAL GAS

60. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. “Equilibrium” Learning Targets Reasoning Describe how the market equilibrium price and quantity are determined. Reasoning Determine the effects on equilibrium price and quantity when demand and/or supply shift. Skill Draw shifts in supply and demand curves.

61. Last Slide Viewed ForwardBack End ShowResourcesTitle PageTable of Contents Copyright © 2013 N.S. Resources