ECONOMICS

ECONOMICS

DEFINITIONSTERMS YOU MUST KNOW!

"Most simply put, economics is the study of making choices."

Economics:"The study of the production, distribution and consumption of wealth in human society."

The Economist's Dictionary of Economics

DEFINITIONSTERMS YOU MUST KNOW!

ResourcesScarcityGoodsServices

RESOURCES

Available stocks or supplies on which we can draw to satisfy our needs and wants

SCARCITY

Shortage; in economics, something is SCARCE when someone will buy it for a price

GOODS

Commodities or products such as lumber, sugar, or computer chips; in economics, a good is any item scarce enough to command a price

SERVICES

Work done for other people; for example, barbers, musicians and architects provide services for other people. In economics, a service is any service scarce enough to demand a price.

DEFINITIONSTERMS YOU MUST KNOW!

Opportunity costImpulse buying

OPPORTUNITY COST

Something given up to obtain something else

IMPULSE BUYING

Making a purchase without weighing the opportunity cost

Maybe CASH Maybe TIME

Maybe RESOURCES

SPENDING TRENDS

For this assignment you are going to focus on spending trends for your age group.

• 1.) First you are going to identify between needs and wants for your age group. Minimum of 5 for each need and want.

• 2.) Next you are going to identify the needs and wants for the opposite sex; if you are unsure, ask a peer in your class. Identify trends that you see.

• 3.) Once you have gathered this information you are going to identify a factor that creates purchasing trends for each of the wants for both sexes. (10 factors in total, factors must be different)

• 4.) For each of the wants for both sexes you are going to explain how advertising affects those particular purchases in 1-2 complete sentences.

ECONOMICSFor this assignment you are going to focus on spending trends for your age group.

• 1.) First you are going to identify between needs and wants for your age group. Minimum of 5 for each need and want.

• 2.) Next you are going to identify the needs and wants for the opposite sex; if you are unsure, ask a peer in your class. Identify trends that you see.

• 3.) Once you have gathered this information you are going to identify a factor that creates purchasing trends for each of the wants for both sexes. (10 factors in total, factors must be different)

• 4.) For each of the wants for both sexes you are going to explain how advertising affects those particular purchases in 1-2 complete sentences.

For this assignment you are going to focus on spending trends for your age group.

• 1.) First you are going to identify between needs and wants for your age group. Minimum of 5 for each need and want.

• 2.) Next you are going to identify the needs and wants for the opposite sex; if you are unsure, ask a peer in your class. Identify trends that you see.

• 3.) Once you have gathered this information you are going to identify a factor that creates purchasing trends for each of the wants for both sexes. (10 factors in total, factors must be different)

• 4.) For each of the wants for both sexes you are going to explain how advertising affects those particular purchases in 1-2 complete sentences.

For this assignment you are going to focus on spending trends for your age group.

• 1.) First you are going to identify between needs and wants for your age group. Minimum of 5 for each need and want.

• 2.) Next you are going to identify the needs and wants for the opposite sex; if you are unsure, ask a peer in your class. Identify trends that you see.

• 3.) Once you have gathered this information you are going to identify a factor that creates purchasing trends for each of the wants for both sexes. (10 factors in total, factors must be different)

• 4.) For each of the wants for both sexes you are going to explain how advertising affects those particular purchases in 1-2 complete sentences.

• The producer’s side of the market

• The consumer’s side of the market

THE LAWS OF SUPPLY AND DEMAND

SUPPLY DEMAND

as the price of a good or service rises, its quantity demanded falls;

as the price of a good or service falls, its quantity demanded increases

as the price of a good rises, its quantity supplied will rise;

CATHERINE’S DEMAND SCHEDULE AND DEMAND CURVE

Copyright © 2004 South-Western

Price ofIce-Cream Cone

0

2.50

2.00

1.50

1.00

0.50

1 2 3 4 5 6 7 8 9 10 11 Quantity ofIce-Cream Cones

$3.00

12

1. A decrease in price ...

2. ... increases quantity of cones demanded.

7SUPPLY AND DEMAND

MARKET DEMAND IS THE SUM OF INDIVIDUAL DEMANDS

BEN’S SUPPLY SCHEDULE AND SUPPLY CURVE

Supply curve

Price ofIce-cream cone

Quantity ofCones supplied

$0.000.501.001.502.002.503.00

0 cones012345

0 1210 1191 2 3 4 5 6 7 8Quantity of Ice-Cream Cones

$3.00

2.50

2.00

1.50

1.00

0.50

Price of Ice-Cream

Cones

1. An increasein price . . .

2. . . . increases quantityof cones supplied.

-When consumers start paying more for cupcakes than for donuts, bakeries will increase their output of cupcakes and reduce their output of donuts in order to increase their profits.

-When your employer pays time and a half for overtime, the number of hours you are willing to supply for work increases.

The law of supply summarizes the effect price changes have on producer behavior. For example, a business will make more video game systems if the price of those systems increases. The opposite is true if the price of video game systems decreases. The company might supply 1,000,000 systems if the price is $200 each, but if the price increases to $300, they might supply 1,500,000 systems.

At $2.00, the quantity demanded is equal to the quantity supplied!

SUPPLY AND DEMAND TOGETHER

Demand Schedule

Supply Schedule

Supply

0 1210 1191 2 3 4 5 6 7 8Quantity of Ice-Cream Cones

$3.00

2.50

2.00

1.50

1.00

0.50

Price of Ice-Cream

Cones

Equilibrium

Demand

Equilibriumprice

Equilibriumquantity

EQUILIBRIUM OF SUPPLY AND DEMAND

THE HIDDEN MARKET• The SUBSTITUTION effect:

For every good or service, there is a substitute available:

• A hot dog for $1 instead of a slice of pizza for $3

• Smaller pieces of pizza for less money

• Cheaper pizza with fewer toppings

If you are selling a slice of pizza for $3, there are many consumers out there who may only have $1, or $2 in their pocket. These consumers are, for you, a HIDDEN MARKET. How do you reach them?

SUPPLY AND DEMAND ASSIGNMENT QUESTION 1

Create a supply and demand chart for a product of your choice. Use what you are familiar with and know to be REASONABLE prices!! Identify the following: a) supply lineb) demand linec) market equilibriumd) excess goodse) scarcityf) the target market for your good

ECONOMICS

SUPPLY AND DEMAND ASSIGNMENT QUESTION 2

What would happen to the supply and demand for your good under the following situations? a. an increase in price of $2-$5b. a decrease of $2-$5c. the price doubles

ECONOMICS

Supply

0 1210 1191 2 3 4 5 6 7 8Quantity of Ice-Cream Cones

$3.00

2.50

2.00

1.50

1.00

0.50

Price of Ice-Cream

Cones

Equilibrium

Demand

Equilibriumprice

Equilibriumquantity

EQUILIBRIUM OF SUPPLY AND DEMAND

3. Define hidden market. Identify 3 separate items that are designed to reach the hidden market for the product you chose in #1. 4. What is the difference between your target market and your hidden market? 5. What is the difference between a need and a want? Give examples, using product or service examples from your own life experience.

SUPPLY AND DEMAND ASSIGNMENT QUESTION 3 - 5

ECONOMICS