Week 6 AEC Topics

Week 6 AEC Topics

Learning Targets

• Define demand and supply and other concepts related to it

• Discuss and explain factors affecting demand and supply

• Distinguish movement from shift of demand and supply

• Relate elasticity in explaining consumer and producer behavior

• Explain the law of supply and demand, and how equilibrium price and quantity are determined 

Open Ended

What is "demand"?

Demand

The amount of a good that buyers are willing and able to purchase (Mankiw, 2011)

Open Ended

What is "supply"?

Supply

Refers to the amount of a good that sellers are willing and able to sell (Mankiw, 2011)

Open Ended

What does the "law of demand and supply" mean?

Law of Supply and Demand

The claim that the price of any good adjusts to bring the quantity supplied and demanded for that good into balance (Mankiw, 2011).

Open Ended

How does the "demand curve" differ from "supply curve"?

Demand Curve

a schedule that shows the level of consumption at alternative prices at a given point in time. (Tullao, 2018)

Factors Affecting Demand

• Income

• Prices of Other Commodities

• Expectation

• Taste

• Market

Supply Curve

a schedule showing a direct or positive relationship between the price of the commodity and level of output that the seller is willing to supply at a given point in time other things held constant. (Tullao, 2018)

Factors Affecting Supply

• Price of Production Inputs

• Taxes

• Technology

• Expectation

Shift vs Movement

" Shift" is different from "movement" in the demand and supply curve

Elasticity

• Elasticity- Measurement of the percentage change in one variable that results from a 1% change in another variable.

• Price elasticity of demand: how sensitive is the quantity demanded to a change in the price of the good.

• Price elasticity of supply: how sensitive is the quantity supplied to a change in the price of the good.

Inelastic demand and supply

Inelastic demand means that the quantity demanded is not very sensitive to the price.

Inelastic supply means that the quantity supplied is not very sensitive to the price.

Elastic demand and supply

Elastic demand means that the quantity demanded is sensitive to the price.

Elastic supply means that the quantity supplied is sensitive to the price.

Multiple Choice

Which of the following correctly describes "demand"?

• the claim that the price of any good adjusts to bring the quantity supplied and demanded for that good into balance

• refers to the amount of a good that sellers are willing and able to sell

• a schedule showing a direct or positive relationship between the price of the commodity and level of output

• the amount of a good that buyers are willing and able to purchase

Multiple Choice

True or False:

Inelastic demand means that the quantity demanded is not very sensitive to the price.

• TRUE

• FALSE

Multiple Choice

True or False:

Equilibrium happens when quantity demanded is equivalent quantity supplied.

• TRUE

• FALSE

Multiple Choice

Which of the following correctly describes "supply"?

• the claim that the price of any good adjusts to bring the quantity supplied and demanded for that good into balance

• refers to the amount of a good that sellers are willing and able to sell

• a schedule showing a direct or positive relationship between the price of the commodity and level of output

• the amount of a good that buyers are willing and able to purchase

Multiple Select

Check all the factors affecting the demand of a commodity.

• Income

• Taste

• Market

• Taxes

Poll

Define demand and supply other concepts related to it.

• Beginning

• Approaching Proficiency

• Proficient

• Exemplary

Poll

Discuss and explain factors affecting demand and supply

• Beginning

• Approaching Proficiency

• Proficient

• Exemplary

Poll

Distinguish movement from shift of demand and supply

• Beginning

• Approaching Proficiency

• Proficient

• Exemplary

Poll

Relate elasticity in explaining consumer and producer behavior

• Beginning

• Approaching Proficiency

• Proficient

• Exemplary

Poll

Explain the law of supply and demand, and how equilibrium price and quantity are determined

• Beginning

• Approaching Proficiency

• Proficient

• Exemplary