Strand E1 The Market EconomyStandard 1.3Prices, Supply, and DemandGrade Level HS18.104.22.168.2GLCE/HSCELaw of Supply – Explain the law of supply and analyze the likely change in supply when there arechanges in prices of the productive resources (e.g., labor, land, capital including technology), or the profit opportunities available to producers by selling other goods or services, or the number of sellers in a market.Law of Demand – Explain the law of demand and analyze the likely change in demand when there are changes in prices of the goods or services, availability of alternative (substitute or complementary) goodsor services, or changes in the number of buyers in a market created by such things as change in income or availability of credit.Price, Equilibrium, Elasticity, and Incentives – Analyze how prices change through the interactionof buyers and sellers in a market including the role of supply, demand, equilibrium, elasticity, and explain how incentives (monetary and non-monetary) affect choices of households and economic organizationsKey conceptsEssential understandings(Procedural or Conceptual)Vocabulary- law of supply, profit, opportunities, goods, services, sellers, market, law of demand, change in demand, buyers, equillibrium, elasticity, incentives, monetary, economic organizationsAligned AssessmentsStudents will know1. The law of supply as it relates to the factors of production2. The law of demand as it relates to substitute and complementary goods3. How price can change through supply/demand elasticity and incentivesStudents will be able to1. Justify changes in the law supply by plotting a graph to show how the factors of production, subsitutes, and the impact of sellers have on the market2. Justify changes in the law of demand by plotting a graph to show the impact of alternative goods and services, changes in number of buyers and changes in income and credit3. Plot a graph and interpret the effect supply/demand elasticity has on the equilibrium price, and how incentives affect the behavior of households and economic organizationsStudent Friendly Language Target Assesment1. I can justify change in the law of supply by plotting a graph to show how the factors of production, substitutes, and the impact of sellers have on the market2. I can justify changes in the law of demand by plotting a graph to show the impact of alternative goods and services, changes in number of buyers and changes in income and credit3. I can plot a graph and interpret the effect supply/demand elasticity has on the equilibrium price, and how incentives affect the behavior of households and economic organizationsAssessment: 1
Supply/Demand Scenarios and effects on Market Price and Quantity
- Heavy frost destroys a large portion of the coffee crop this year and people switch more to drinking tea. What will happen to the demand, supply, market price and market quantity of coffee and tea? Circle the correct answer in each box below.
Leather ShoesTennis ShoesDemandIncrease DecreaseIncrease DecreaseSupplyIncrease DecreaseIncrease DecreaseMarket PriceIncrease DecreaseIncrease DecreaseMarket QuantityIncrease DecreaseIncrease Decrease
- People’s taste has changed regarding type of shoes being bought. People are buying more leather shoes versus tennis shoes. What will happen to the demand, supply, market price and market quantity of leather shoes and tennis shoes? Circle the correct answer in each box below.
T-Shirt Factory Law of Supply
Price per T-Shirt
Number of T-Shirts
Creating a Supply CurveUse the information above for the questions below.Create a supply curve for the number of T-Shirts and price per shirt. Then analyze the graph and answered thefollowing questions
Change in Supply
At what price would suppliers supply 75 T-Shirts
What would be the supply of T-Shirts at 9.00 Dollars?
Would you say, in this scenario, the supply of T-shirts is elastic or inelastic?
Identify the change in supply (increase or decrease) and why supply has changed in each of the following scenarios.
- The cost of materials used to make the T-shirts falls
- The T-shirt company sends employees to a seminar to learn new training methods improve worker efficiency
- The T-Shirt company opens its first store in a town
- The corporate tax increases
- The T-shirt company machines have broke down recently and replacement parts are hard to find.
- The government issues subsidies for all T-shirt manufacturers
Government passes a law stating all T-shirts must be made of non-flammable material.
Market Price Homework
Market for DVD Players
Price per Player
1. Create a graph representing both demand and supply curves
Answer the following questions using the chart above
- Estimate the following
- What is the market price
- What is the quantity supplied/demanded at the market price
- If the electronic store decided to sell the DVDs at 199 dollars
- The quantity demanded at that price is _________ units
- The quantity supplied at that price is ________ units
- This situation has created a shortage/surplus (circle one)
- What is the quantity of the shortage or surplus _________
If the electronic store decided to sell the DVDs at 499 dollars
The quantity demanded at that price is _________ units
The quantity supplied at that price is ________ units
This situation has created a shortage/surplus (circle one)
What is the quantity of the shortage or surplus _________
Below are newspaper headlines regarding beef sales in the United States. Decide whether the headline would increase or decrease demand, which determinant is causing the shift and what line on the graph would represent the shift of demand.
Increase or Decrease of Demand
Which determinant is causing the shift?
Which line on the graph would this shift represent? (See chart below)
Price of Chicken increases
Millions of immigrants swell US population
Pork prices to drop
Income across the US drops for the 3rd month
Shortage of charcoal across the US
Ray Kroc opens the first McDonald’s and invents the Big Mac
Glenn’s has a sale on hamburger bunsAssessment 5For each product, identify whether it is elastic or inelastic for each reason. At the end, write a paragraph for each, explaining why you think the product is more elastic or inelastic
Portion of Income
Luxury or Necessity
- Is Gasoline elastic or inelastic, why?
- Is Playstation3 elastic or inelastic, why?
- Is butter elastic or inelastic, why?
- Is an automobile elastic or inelastic, why?
- Are cigarettes elastic or inelastic, why?