Small Group Problem Solving Activity
Role: Small Focus Group for Target Corporation-NEED ONE PIECE OF NOTEBOOK PAPER
Task: Create a Top 10 List of Trick or Treat Candy Items Demanded by consumers last year
during Halloween.
Goal: To match my list of “Top 10” Trick or Treat Candy demanded (purchased) last year during
Halloween.
Reward: “People respond to incentives in predictable ways!”: $500 prize per group!
JUST KIDDING- From “Freakonomics” we know that people would probably cheat then.
Prize: “Trick or Treat” candy for winning team and all the glory and honor bestowed to you for a
“Job well done!”
 Brainstorm a list of twenty items within your group
 If you have a list greater than twenty, you must decide as a group which item (s)
to eliminate from your list
 Match my List: Total possible score 14 points
Top 10 Demand for Trick or Treat
Candy 2013
Top Ten Trick or Treat Candy Purchased by consumers at Halloween 2013!
1.
Skittles
2.
Snickers
3.
Starbursts
4.
M&Ms
5.
Nerds
6.
Tootsie rolls
7.
Sour Patch Kids
8.
Twizzlers
9.
Smarties
10.
Candy Corn*
We will be using Cornell Note Taking
Format Today!
Smile and “Own the Day!
Take one step at a time to
Success in Economics class!
Unit Two: Learning Objectives:
North Clackamas School District
Social Studies Priority Standards:
• HS.51 (A): Explain how supply and
demand represents economic activity
and describe the factors that cause them
to shift.
Lesson One: Daily Learning Target
I Can define and explain in writing the
following key Economic concepts:
Law of Demand
Substitution Effect
Income Effect
Why do roses cost more on Valentine’s Day?
Why do TV ads cost more during the Super Bowl
($4 million for 30 sec.) than during Nick at Nite reruns?
Why do hotel rooms in Sun Valley, Idaho cost
more in the winter than in the summer?
Why do surgeons earn more than butchers?
Why do pro basketball players earn more than pro hockey players?
“Econ, Econ”
Why do Christmas lights go on sale December 26th?
Why can I pay $40 to see Hall and Oates at the Schnitzer in 2014
When in 1984 it would have cost me $100 at Memorial Coliseum?
The answer to these and other economics questions boil down to the workings of
supply and demand – the subject of this chapter.
D
$3
“JO”
“Mo”
“Bo”
D
+
$2
$3
+
=
$3
39 45
$3
[Total]
$2
$2
$2
35 40
D 1 D2
D
2630
100 115
And, what if the price of this product decreases from $3 to $2?
A point to point movement on the same “D” curve is a “Change in QD”
.
One out of every 8,000 high school basketball players
goes on to play in the NBA. Scouts looking for “rare talents” (scarcity)
.
Demand
A relationship between
price and quantity
demanded in a given time
period, ceteris paribus.
What is Demand?
• Willing and able to purchase a product at a
particular price
• How many of you would like a Porsche [or like
vehicle]?
• How many of you are able?
• What’s the difference between willing and able?
• Idea of time and place – at this time, you may be
willing to buy a Porsche, but are not able,
therefore you do not have a “DEMAND” for a
Porsche
Markets
In a market economy, the price
of a good is determined by the
interaction of demand and
supply.
Why do we purchase more when a sale
occurs?
It’s obvious, isn’t it? Consumers
love low prices!
Look at this demand curve.
What happens to quantity purchased
as prices rise?
As price goes down,
demand goes up!
P QD
$5
4
3
2
1
10
20
35
55
80
$5
D
$4
$3
$2
$1
0 10 20
35
55
80
Quantity Demanded
…a specified time period
…other things being equal
QD – how much will be purchased at a specific price [& date].
The Demand For Ice Cream Cones
Quantity Demanded
$850
$260
QD1
QD2
6,000 600,000
.
“You can have it in
any color you want
as long as it’s black”
Production went from 6,000 a year to 600,000.
The Law of Demand
The law of demand states that
consumers buy more of a good
when its price decreases.
Conversely, consumers buy less of
a good when its price increases.
Consumers love low prices.
It really depends on the price, doesn’t it?
The Substitution
Effect
One reason that the law of demand
exists is the substitution effect.
The substitution effect occurs when a
consumer reacts to an increase in a
good’s price by buying less of that
good and more of a similar yet cheaper
good.
When the price of orange juice rises,
consumers substitute cheaper apple
juice for orange juice.
D1 D2
D
P
Price
Of
7UP
Demand
for
Dr Pepper
 Lower prices allow consumers to
increase demand.
 Lower prices increase consumers’
purchasing power.
 This is known as the “income Effect”
The Income Effect
• The income effect is the change in
consumption resulting from a change
in income.
• In other words, when prices rise, your
money buys less.
• Higher prices reduce your purchasing
power.
$1
D
QD1 QID2 QD3
Price
.
QD
Economists love graphs because graphs
provide easy understanding of economic
concepts.
If a picture is worth a thousand words,
a graph is worth even more.
A demand schedule records the quantity
demanded at various prices.
A demand schedule can easily be
converted to a demand curve.
Demand curve
Draw a Demand curve now. With a verical
“price” line and a horizontal “quantity line” and
a “0” at the axis.
Now plot out the numbers from this demand
Schedule for Sony Blu-Ray Players
at Best Buy.
Demand curve
Draw another Demand curve again. With a
verical “price” line and a horizontal “quantity
line” and a “0” at the axis.
Law of Demand
Remember: As price falls, the quantity
demanded increases. As the price rises, the
quantity demanded decreases
P
QD
Price For Bruno Mars
Ticket at the Moda Center
in Portland
Quantity of tickets (in
thousands) demanded at the
given price
$50
0
$40
4
$30
8
$20
12
$10
$0
16
20
Inverse (Negative) Relationship
Inverse - 2 variables move in opposite directions
$50
40
30
20
10
0
Demand for tickets
(thousands)
0
4
8
12
16
20
$50
a
b
c
d
e
f
TICKET PRICE (P)
TICKET
PRICE
40
30
20
10
a
b
In Economics the
independent variable
can be on either axis.
c
d
e
f
0
4
8
12
16
20
Demand for tickets IN THOUSANDS (Q)
Finish “Freakonomics” Reading:
Finish Reading Article: Drug
Dealers who live with their Moms!
Pick up Reading Questions from
me.
Answer questions with a partner
and turn into me please. Finished…
Partner Economic Book Practice:
Skim through Unit two: Lesson One
in the economics book (pages 8790)
Answer questions 1-11 on a piece of
notebook paper and turn directly
into me today.