AgendaAgenda Test #1Test #1

Intro to DemandIntro to Demand– LectureLecture– Going to the moviesGoing to the movies

Homework…Homework…– Crossword puzzleCrossword puzzle– Print and Review Powerpoint for class two periods from

today– Read “Current Reading Assignment”

Next Class….Watch “Freakonomics”

Test #1Test #1Ten Minute ReviewTen Minute Review

Remain Quiet or detention awaits youRemain Quiet or detention awaits you

Cheat and you dieCheat and you die(and you get a ZERO on the test…(and you get a ZERO on the test…

a really embarrassing eulogy)a really embarrassing eulogy)

TEST ENDS @ 10.50TEST ENDS @ 10.50

Module #2 – Supply and Module #2 – Supply and DemandDemand

Law of DemandLaw of Demand– As price increases, quantity demanded As price increases, quantity demanded

decreasesdecreases– As price decreases, quantity demanded As price decreases, quantity demanded

increasesincreases

Module #2 – Supply and Module #2 – Supply and DemandDemand

Law of DemandLaw of Demand– As price increases, quantity demanded As price increases, quantity demanded

decreasesdecreases– As price decreases, quantity demanded As price decreases, quantity demanded

increasesincreases

– Price means QPrice means Qd d and Price means Qand Price means Qd d

Module #2 – Supply and Module #2 – Supply and DemandDemand

Law of DemandLaw of Demand– As price increases, quantity demanded As price increases, quantity demanded

decreasesdecreases– As price decreases, quantity demanded As price decreases, quantity demanded

increasesincreases

– Price means QPrice means Qd d and Price means Qand Price means Qd d

– P QP Qd d , P Q , P Qd d

LAW OF DEMANDLAW OF DEMANDAs Price Falls…As Price Falls…

… …Quantity Demanded RisesQuantity Demanded Rises

As Price Rises…As Price Rises…

… …Quantity Demanded FallsQuantity Demanded Falls

Price Quantity Demanded

Module #2 – Supply and Module #2 – Supply and DemandDemand

Law of DemandLaw of Demand– As price increases, quantity demanded As price increases, quantity demanded

decreasesdecreases– As price decreases, quantity demanded As price decreases, quantity demanded

increasesincreases

– P QP Qd d , P Q , P Qdd

– ““Quantity demanded” means willing Quantity demanded” means willing AND able to buy the good or serviceAND able to buy the good or service

Module #2 – Supply and Module #2 – Supply and DemandDemand

Law of DemandLaw of Demand– ““Quantity demanded” means willing Quantity demanded” means willing

AND able to buy the good or serviceAND able to buy the good or service

– Do I create demand if I want a $125,000 Do I create demand if I want a $125,000 sports car?sports car?

Module #2 – Supply and Module #2 – Supply and DemandDemand

Law of DemandLaw of Demand– ““Quantity demanded” means willing Quantity demanded” means willing

AND able to buy the good or serviceAND able to buy the good or service

– Do I create demand if I want a $125,000 Do I create demand if I want a $125,000 sports car?sports car?

– Sadly…NO.Sadly…NO.

Module #2 – Supply and Module #2 – Supply and DemandDemand

Law of Demand can be represented in a Law of Demand can be represented in a “Demand Schedule”“Demand Schedule”

A Demand Schedule is a table that relates A Demand Schedule is a table that relates Price (the driver) to Quantity demanded Price (the driver) to Quantity demanded (the responder)(the responder)

P QP Qdd

$6$6 88 1010 1212 14 14

This is a Demand Schedule

The Law of Demand can be The Law of Demand can be represented graphicallyrepresented graphically

Price Price

Quantity Quantity

The Law of Demand can be The Law of Demand can be represented graphicallyrepresented graphically

Price Price

Demand CurveDemand Curve

Quantity Quantity

Why does is go “high to low”?

The Law of Demand can be The Law of Demand can be represented graphicallyrepresented graphically

Price Price

Demand CurveDemand Curve

Quantity Quantity

Why does the demand curve go “high to low”?

Because when price is high, quantity demanded is lowAnd when price is low, quantity demanded is high.

Module #2 – Supply and Module #2 – Supply and DemandDemand

Going to the moviesGoing to the movies

P QP Qdd

$6$6

88

1010

1212

14 14

Module #2 – Supply and Module #2 – Supply and DemandDemand

Going to the moviesGoing to the movies

P QP Qdd

$6$6

88

1010

1212

14 14

As price went up, did Qd go down? Law of demand?

Freakonomics…Summary

FREAKONOMICS is the film version of the bestselling book of the same name by Steven Levitt and Stephen Dubner. The film examines human behavior with provocative case studies, bringing together a team of filmmakers responsible for some of the most acclaimed and entertaining documentaries in recent years.

Four Segments

1. A Roshanda By Any Other Name : Morgan Spurlock's investigation of the possible implications of names, especially "black" vs. "white" names, in personal development and social advancement.

Question: Can an initial perception – in this case because of your name -- affect job prospects, promotions, etc.?

2. Pure Corruption : Alex Gibney's exploration of the Japanese concept of yaochō (match fixing) in Sumo wrestling.

Question: Does the appearance honesty create an environment where corruption is most likely to exist? Think Penn State football, the Catholic church, the Boy Scouts, etc.

3. It's Not Always A Wonderful Life : Narrated by Melvin Van Peebles and directed by Eugene Jarecki, this segment explores the question of what led to a decline in the urban crime rate in the US during the mid- to late 1990s. The authors of Freakonomics suggest that a substantial factor was the 1973 US Supreme Court case, Roe v. Wade, in the US which permitted people to have legal abortions, leading to more wanted children with better upbringings.

Comment: Just because it’s controversial doesn’t mean it’s wrong. And correlation is not causation.

4. Can You Bribe A 9th Grader To Succeed! : Rachel Grady documents an experiment in Chicago Heights, Illinois to determine the efficacy of paying students to achieve higher grades.

Comment: Incentives matter.

Next class we watch Freakonomics

Module #2 – Supply and Module #2 – Supply and DemandDemand

HomeworkHomework– Crossword puzzleCrossword puzzle– Print and Review Powerpoint for class

two periods from today– Read “Current Reading Assignment”

(online)

– Next Class….Watch Freakonomics

HandoutsHandouts