Marche 17th,18th

1
Marche 17th,18th

• Collect stock data
• Lending Video?
• No Notes, but write these questions down
• Basic 9,10
• Lecture 11
• Workbook pages 39-42, 43-45
• on a separate sheet of paper.

• What is a subprime loan?What is a foreclosed
  home? What are the negative externalities?
• HOMEWORK
• GOL Part 3 due 3.19.08

2
http//www.responsiblelending.org/issues/mortgage/
martin-eakes-video-on.html

• What defies logic when it comes to home loans?
• What storm is Martin Easkes referring to?
• What storm is Martin Easkes referring to
  currently?
• How many people who have subprime loans might go
  into foreclosure?

• Which ethnic groups will be hardest hit?
• How much might subprime loans monthly increase
  by?
• Whom does the Marti Easkes place blame on for
  foreclosures?
• What are the negative externailities to the
  housing market subprime fiasco?
• What is Martin Easkes asking lenders to do in the
  future?

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Lecture 11 Demand Part 1 2
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18. Lecture 11 Demand Part 1

• Just a remindervisit http//econrhs.googlepages.c
  om/ to access PowerPoints, worksheets, and other
  class materials!
• If you are absent you should check this web-site
  so you can stay caught up!

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What is Demand?
Remember when taking Cornell Notes you need to
come up with at least 3 questions per page!
6
What is Demand? cont.
7
What is Demand? cont.

• Example Betty doesnt have the 60,000 to buy a
  Porsche. If she did have the money, though, she
  says that she would buy it. Betty has the
  willingness but not the ability. Under these
  circumstances she does not have a demand for the
  Porsche!

8
SPECIAL HOMEWORK TONIGHT!!!

• Many people believe that the more money a person
  has, the more expensive version of a product that
  person will buy.
• People are assuming that someone who has the
  ability to buy something also has the willingness
  to buy it.
• Economists dont think this waythey know most
  people try to find the best deal!

9
Thinking like an Economist! (Please note this is
not on p. 91 of your textbookeven though that is
what the log says)

• Survey 5 people whether they buy the most
  expensive items available when they can afford
  them, or look for best buys even when they have
  more than enough money for the most expensive
  items.
• Create the following chart on a separate piece of
  paper

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The Law of Demand
11
The Law of Demand
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Quantity Demanded
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The Law of Diminishing Marginal Utility
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The Law of Diminishing Marginal Utility
Experiment We need 2 volunteers (a boy and a
girl)
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The Law of Diminishing Marginal Utility
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The Law of Demand in Numbers Pictures
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The Law of Demand in Numbers Pictures
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The Law of Demand in Numbers Pictures
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The Law of Demand in Numbers Pictures

• The graph is a called a curve.
• The curve always slopes downward from left to
  right!

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The Law of Demand in Numbers Pictures
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The Law of Demand in Numbers Pictures
22
ReviewTrue or False

• Both willingness and ability to purchase must be
  present for demand to exist.
• TRUE
• As price decreases, the quantity demanded
  decreases.
• FALSE
• The more utility you receive from a good, the
  higher the price you are willing to pay for that
  good.
• TRUE

23
Summary

• When completing your notes you need to write a
  3-5 sentence summary of the lecture. This is a
  part of your notes grade!

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CLASS WORK/HOMEWORK

• HOMEWORK REMINDER
• Workbook pages 36-38 due Wed in class
• Thinking like an Economist (survey) due Wed 11/1
  11/2
• Basics 7 Quiz are due Thurs 11/1 or Fri 11/2.

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20. Lecture 11 Demand Part 2
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When Demand Changes, the Curve Shifts

• Demand can change
• When Demand goes upthe curve shifts to the
  right
• When Demand goes downthe curve shifts to the
  left

Remember when taking Cornell Notes you need to
come up with at least 3 questions per page!
D2
D3
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Answer the following questions in your notebook

• In the graph, the demand curve in the middle, the
  one labeled D1, is the starting point. On this
  curve, what is the quantity demanded at a price
  of 1?
• 400 quarts of Orange Juice

B
A
C
1
D2
D1
D3
200
0
400
600
Quantity demanded of orange juice (quarts)
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Answer the following questions in your notebook

• Suppose the demand for Orange Juice increases to
  600 quarts. People still want to pay 1 per
  quart, but now they want to buy more at that
  price. What happened to the demand curve?
• It shifts to the right and becomes D2. When
  demand goes up, the demand curve shifts to the
  right!

B
A
C
1
D2
D1
D3
200
0
400
600
Quantity demanded of orange juice (quarts)
29
Answer the following questions in your notebook

• Now suppose that the demand for Orange Juice
  decreases to 200 quarts. What happens to the
  demand curve?
• It shifts to the left and becomes D3. When
  demand goes down, the demand curve shifts to the
  left.

B
A
C
1
D2
D1
D3
200
0
400
600
Quantity demanded of orange juice (quarts)
30
In your notebook brainstorm a list answering the
following question

• Make a list of the most popular holiday gifts
  from last year.
• What are some of the reasons that the demand for
  these items was so high?
• Do you think the demand will be as high again
  this year? Why or why not?

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What factors cause demand curves to shift?
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What factors cause demand curves to shift?
As gas prices soar, fewer SUVs are being
purchased while more hybrids are being sold every
day!
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What factors cause demand curves to shift?
34
In your notebook recreate the following chart.
Fill out the chart as a class.
35
What factors cause demand curves to shift?
36
What factors cause demand curves to shift?
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What is Elasticity of Demand?
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What is Elasticity of Demand?
Copy the formula!
Elasticity is determined using the following
formula
To find the percentage change in quantity
demanded or price, use the following formula
subtract the new number from the original number,
and divide the result by the original number.
Ignore any negative signs, and multiply by 100 to
convert this number to a percentage
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What is Elasticity of Demand?
Copy the formula!
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What is Elasticity of Demand?
Elastic demand
Inelastic demand
Unit-elastic demand
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What is Elasticity of Demand?
42
What is Elasticity of Demand?
43
What determines Elasticity of Demand?
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What determines Elasticity of Demand?
45
What determines Elasticity of Demand?
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What determines Elasticity of Demand?
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Relationship between Elasticity Revenue
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ReviewTrue or False

• When a demand curve shifts to the right, demand
  has decreased.
• FALSE
• Demand has increased when the demand curve shifts
  to the right.
• TRUE
• The prices of related goods affect the demand
  curve.
• TRUE
• A change in the number of buyers creates a change
  in the quantity demanded.
• TRUE

49
ReviewTrue or False

• Demand is always inelastic.
• FALSE
• Unit-elastic demand exists when the quantity
  demanded is less than the percentage change in
  price.
• FALSE
• Time affects the elasticity of demand.
• TRUE
• The demand for necessities is likely to be
  inelastic.
• TRUE
• It doesnt matter if demand is elastic,
  inelastic, or unit-elastic.
• FALSE

50
Summary

• When completing your notes you need to write a
  3-5 sentence summary of the lecture. This is a
  part of your notes grade!

51
CLASS WORK/HOMEWORK

• HOMEWORK REMINDER
• Workbook pages 39-49 due Mon 10/22 or Tues 10/23.
• Basics 8 Quiz are due Wed 10/24
• Part 3 of Project due Wed 10/24
• Demand Chapter 4 test on 10/25 or 10/26 has been
  canceled.