Week 2: Demand and Supply – The Foundation of Economics
This week we lay the the foundation for the whole study of economics. We will learn how prices are determined in markets. Sellers with an idea of the price they would like to get for what they are selling – a reserve price try to find a willing buyer. Buyers come to the market with a notion of what they want and the max they are willing to pay for it. Together these buyers and sellers negotiate their way to an equilibrium price.
We will look at the reasoning behind buyers and sellers behavior, how an equilibrium is arrived at and why prices change.
This is a big prep week so give yourself time for the videos.
____ Read 3-1 through 3-4. Start here http://firstname.lastname@example.org:12/Demand-Supply-and-Equilibrium-
If you end up on the openstax home page, we are using Economics by Tim Taylor. Click “get this book” then open with web view for reading. You can continue without donating.
____Watch All of the videos below:
E14: Market Equilibrium
Supply & Dance, Man! fun and good explanation of demand and supply from We The Economy. Make it the first or last one you watch.
___ Complete the three tables below while watching and reading
Here is a printable version Demand&Supply note sheet
|Demand Shifters||Example of Increase||Example of Decrease|
|Income||More money means people buy more at every price||Less money means people buy less at every price||recessions, layoffs, raises, etc|
|Supply Shifters||Example of Increase||Example of Decrease|
|Number of producers||More producers means more good available at every price||Fewer producers means less provided at every price||mergers = decrease, world trade = increase|