Supply and Demand

Standard 8:  Summarize the foundational economic principles of supply and demand.  Distinguish between an economic good and an economic service, and draw conclusions about how the law of supply and demand influences what goods and services businesses will produce using limited resources.  Using a range of goods and services as evidence, write a brief informative text illustrating this relationship and the implications for consumers and the economy at large.

Opening Assignment

Complete Activity 3 worksheet  about "Opportunity Cost - Franklin's Decision" from the last lesson

Goods vs. Services

We learned from chapter 1 about the difference between goods and services.  Goods are tangible items that have monetary value and satisfy your needs and wants, such as cars, furniture, televisions, and clothing (something you can actually touch or put in a bag and carry out.)  Intangible items that have monetary value and satisfy your needs and wants are services.  Intangible means you can't actually touch them. Examples of services are getting your car washed, your taxes prepared, your lawn mowed, etc.

How Do Supply and Demand Work Together? 

Read pages 119-121.

Supply and demand work together to help businesses determine the price of their product or service.

Law of supply:  The economic rule that price and quantity supplied move in the same direction.  Suppliers want to supply a larger quantity of goods at higher prices so their businesses can be more profitable.

Law of demand:  The economic principle that price and demand move in opposite directions.  As the price of a good increases, the quantity of the good demanded falls.  As the price falls, demand for the good increases.

When supply and demand intersect that is the equilibrium price for the good or service.

Surpluses of goods occur when supply exceeds demand.

Shortages occur when demand exceeds supply.  Supply: An orange crop is damaged by frost, so grocery stores have fewer oranges.  Demand: After a hurricane, consumers rush to buy plywood to board up broken windows.

https://vimeo.com/27046074

 

Think About it

1. The price of a movie ticket goes from $7.00 to $8.50.  What should happen to the demand for these tickets?
2. Why would an economist say that "Supply and demand are inversely related to one another?
3. You manage a home improvement store.  Your area has just been hit by a flood.  Building supplies quickly become in short supply.  Would you raise prices to profit from this shortage?  Why or why not?

Review Key Concepts

1. What is price gouging (google)?
2. Answer questions 1-3 on page 121 
3. Complete 5.2 worksheets (49-50, 16)

Factors of Production, Scarcity, and Opportunity Cost

Standard 7:  Identify the factors of production (i.e. natural/land, labor, capital, and entrepreneurial).  Discuss the concept of opportunity cost in the context of business operations, and explain how businesses make decisions based on scarcity of resources.

Opening Assignment

What Would you Do With a Million Dollars?
What if you could earn that much playing a professional sport?
Have you ever heard of Ryan Broyles?  Read the following article and answer a few questions on your paper.
Why Would a Millionaire NFL Player Live on Just $60,000?

1. According to the article, what's the average number of years that most pro players play for the NFL? 
2. What pro NFL team did Ryan play for?
3. Who did Ryan initially learn about managing personal finances?
4. What did Ryan "give up" early in his career to plan for later?

Some players should plan better!

What's an economy?  

An economy, or economic system, is the organized way a nation provides for the needs and wants of its people.  Countries with different economic systems have different approaches when making choices.  From their resources available, they must determine how to provide for their own population... through manufacturing, buying, selling, transporting, and investing.

Scarcity

Scarcity is the difference between wants and needs and the available resources.  Think of something that is very valuable.  Take diamonds for example.  Diamonds are very expensive because they are rare.  There are not enough diamonds for everyone to have all they want (or need).  They are scarce.

Now, think about a source that is seemingly unlimited, like air.  Do we have all the air we need?  Air is not as scarce as diamonds are.  See the difference?

 Now use the concept of scarcity to economic resources.  Different economies have different amounts of economic resources.  The U.S. has an abundance of entrepreneurs, and many natural resources, but it still cannot meet the needs and wants of all its citizens.

 

 Click on the link to complete the lesson on scarcity and opportunity cost

More on Ryan Broyles

 

Functions of Business

Standard 6:  Define the term business, and research the four major functions of business: (1) productions and procurement, (2) marketing, (3) management,  and (4) finance and accounting

Opening Assignment

What kind of student are you? Answer the following questions on your own paper:

1. On your own sheet of paper list 3 of your strengths as a student, and 2 weaknesses as a student.
2. Click on the link.  How many businesses last at least 5 years?  10 years?
3. Look online to find the definition of business.  Write it on your paper.
4. Read in your textbook  pages 126 - 129. 

Class Discuss

Why is it a good idea to look at your strengths and weaknesses?

Businesses do this as well.  What you did was similar to how businesses perform a self-evaluation tool called a SWOT analysis (page 34).  It's important to look closely at if the business is meeting it's goals and how it stacks up to the competition.

Objective

Understand the major functions of business

Why do people start a business?

Have you ever gone to a restaurant that you really liked their food, but it eventually went out of business?
Could it be that the owner was a great cook but not good with budgeting money?
There are four basic functions of business that we will learn about today.  If an entrepreneur can intentionally employ these functions they are more likely to reach success.

Click on the link to get to the Glencoe PowerPoint
Slides 34-39 only

We Do

Let's look at the life of the IPhone through these 4 steps.

Group Presentations

1. Each student draws a slip. You will research the definition, and give examples of the term on your slip as it applies to a product and a service.  You will hand write this on your own paper.
2. Then you will find your group by the code explained by your teacher.
3. Your group will select one product and follow it through the major functions of business.  
4. Create a poster showing the progression that will be used in your presentation to the class.
5. You will have next class period to prepare the poster.
6. The next class period will be for group presentations.