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Supply and Demand

Settler Activity (2 minutes) LEARNING OBJECTIVES: Write in the A column how well you understand the lesson objectives! 1 = Understand very well 5= Do not understand at all We are learning to: A B To understand that a market is made up of buyers and sellers.

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Supply and Demand

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  1. Settler Activity (2 minutes) • LEARNING OBJECTIVES: • Write in the A column how well you understand the lesson objectives! • 1 = Understand very well 5= Do not understand at all • We are learning to: A B • To understand that a market is made up of buyers and sellers. • To differentiate between supply and demand and be able to explain any diagrams. • To understand that the price of a good is determined by the interaction of demand and supply. • To recognise that a shortage will lead to a rise in price and a surplus to a fall in price. • To be able to recognise the difference between a normal market and a commodity market Supply and Demand

  2. Lesson Objectives To understand that a market is made up of buyers and sellers. • To achieve a C-E Grade you would need to know the definition of these • To achieve A-C Grade you would need to define and evaluate buyers and sellers To recognise that a shortage will lead to a rise in price and a surplus to a fall in price. • To achieve a C-E Grade you would need to know the definition of these actions • To achieve A-C Grade you would need to define and evaluate the actions and the impact on a business To be able to recognise the difference between a normal market and a commodity market. • To achieve a C-E Grade you would need to know the definition of these • To achieve A-C Grade you would need to define and evaluate the impact the commodity market as on the consumer market

  3. Example GCSE Question, 2010 Paper • Which two of the following are examples of commodities which might be used by a bakery? Select two answers: • A Wheat used in producing bread • B Rent of premises • C Electricity used by ovens • D Sugar used to produce biscuits • E Wages paid to workers

  4. Activity 1. Identify the items to the right column Normal Market Commodity Market Oil, IPAD 2, Copper, Ford Car, Wheat, Mars Bar, Sugar, DELL XPS, Coffee/Tea, XBOX 360,Tobacco, Dyson Cleaner, Cocoa and Ferrari

  5. Activity 2 Mix and MatchAre you a speed reader • www.spreeder.com/app.php

  6. Activity 2 Mix and MatchCheck if you were correct Surplus • When the demand for a good /service is less than the available supply. When a surplus exists, prices will tend to fall Shortage • When the demand for a good/service is greater than the supply. When a shortage exists, prices will tend to rise Supply • The amount of sellers are willing to offer for sale at a given price Demand • The amount of consumers are willing and able to buy at any given price Market • Where buyers and seller meet to exchange goods and services Commodity market • Where buyers and seller meet to exchange commodities (raw materials) Goods/consumer market • The market for everyday products such as clothes and food

  7. Diagram – you don’t need to know it. But I think you guys can get it. Price Quantity Equilibrium Supply Demand

  8. Mr. Baker’s Brilliant Bakery

  9. Activity 3 – read the case study and answer the question Business have little control over the prices they have to pay for raw materials they have to buy. The prices are determined by international markets. However changes in the price of commodities can affect small businesses significantly. In 2007-2008 the price of oil rose dramatically, from around $60 a barrel to $147 a barrel. By December 2008 the price of oil had fallen to under $50 again. This had a big impact on transport costs of both delivering of the raw materials but also the delivering of the final product. Commodities prices can change minute by minute. With commodity prices changing so quickly, the plans of small business, such as cash flow forecasts, profit predictions and business plans can be put into chaos. Bakers bakery may find the rising price in wheat really affect is business.

  10. Activity 4. Market Place, 1 Buyer and Many Sellers Largest single cost for small business is wages to employees or paying yourself a wage. However, we know there are other costs such as rent, insurance, takes etc. Many small businesses also have to buy raw materials and energy. Mr. Baker has to pay for cocoa, wheat, gas and electricity to cook all his baker products. If commodity prices change, it can have a major impact on the cost of production (making the cakes). The size of this effect depends on three factors In your group, you will spend 5 minutes learning your factor. After that you be going out to collect that information from other sellers. After 5 minutes the sellers go to one table to get the information about completing the other tasks, so when they return the buyer they can complete the task. The buyer, shows the sellers how to complete their task (e.g. Buyer 1 teaches sellers from tables 2,3, and 4 etc. )

  11. 50:50 15 £1 Million 14 £500,000 Welcome toWho Wants to be a Millionaire 13 £250,000 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 1 £100

  12. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 1 £100

  13. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 Which of these is a commodity? 11 £64,000 10 £32,000 £16,000 9 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 50:50 1 £100 A: Iphone B: Cocoa C: Bugatti D: Mars Bar

  14. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 1 £100

  15. 15 £1 Million 14 £ 500,000 13 £ 250,000 12 £ 125,000 Which is the right definition for a market? 11 £ 64,000 10 £ 32,000 9 £ 16,000 8 £ 8,000 7 £ 4,000 6 £ 2,000 5 £ 1,000 4 £ 500 3 £ 300 2 £ 200 50:50 1 £ 100 A: Place where buyers and sellers meet B: Place where sellers meet for transaction: C: Place where buyers meet for transaction D: Place where buyers and sellers meet and transaction takes place

  16. 15 £1 Million 14 £ 500,000 13 £ 250,000 12 £ 125,000 11 £ 64,000 10 £ 32,000 9 £ 16,000 8 £ 8,000 7 £ 4,000 6 £ 2,000 5 £ 1,000 4 £ 500 3 £ 300 2 £ 200 1 £ 100

  17. 15 £1 Million 14 £ 500,000 13 £ 250,000 12 £ 125,000 If commodity prices rise it will have what effect on the business? 11 £ 64,000 10 £ 32,000 9 £ 16,000 8 £ 8,000 7 £ 4,000 6 £ 2,000 5 £1,000 4 £ 500 3 £ 300 2 £ 200 50:50 1 £ 100 A: Increase costs B: Customers get a better deal C: More disposable income D: Cheaper prices

  18. 15 £1 Million 14 £ 500,000 13 £ 250,000 12 £ 125,000 11 £ 64,000 10 £ 32,000 9 £ 16,000 8 £ 8,000 7 £ 4,000 6 £ 2,000 5 £ 1,000 4 £ 500 3 £ 300 2 £ 200 1 £ 100

  19. 15 £1 Million 14 £500,000 If demand stays the same and there is increase in supply what happens to the price?? 13 £ 250,000 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £ 4,000 6 £ 2,000 5 £1,000 4 £ 500 3 £ 300 2 £ 200 50:50 1 £ 100 A: Goes down B: Goes up C: Stays the same D: Goes up and down

  20. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 1 £100

  21. 15 £1 Million 14 £500,000 If supply stays the same and demand increase, what happens to the price? 13 £250,000 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 50:50 1 £100 A: Goes down B: Stays the same C: Goes up D: Goes up and down

  22. Congratulations! Congratulations! Congratulations! You’ve Reached the £1,000 Milestone!

  23. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 1 £100

  24. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 What is Mr. Baker’s business called? 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 50:50 1 £100 A: Beautiful Bakery B: Brilliant Bakery C: Bakers Bakery D: Bizarre Bakery

  25. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 1 £100

  26. 15 £1 Million 14 £500,000 13 £250,000 What is the point called when the supply and demand line cross? 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 50:50 1 £100 A: Exchange Point B: Meeting Point C: X D: Equilibrium

  27. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 1 £100

  28. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 Which answer could increase in demand for a product? 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 50:50 1 £100 A: Current trends B: Exchange rates C: Inflation D: Competition

  29. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 1 £100

  30. 15 £1 Million 14 £500,000 13 £250,000 Which of these companies will be most affected by an increase in commodity prices? 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 50:50 1 £100 A: Recruitment Agency B: HMV C: Plumber D: Pharmacy

  31. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 1 £100

  32. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 Where is Mr Baker from? 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 50:50 1 £100 A: Wales B: Scotland C: Merseyside D: Yorkshire

  33. Congratulations! Congratulations! Congratulations! You’ve Reached the £32,000 Milestone!

  34. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 1 £100

  35. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 Which factors have the biggest impact on wheat prices? 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 50:50 1 £100 A: People buying more sausage rolls B: Natural disasters C: Kellogg's changing its ingredients D: People buying more shredded wheat

  36. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 1 £100

  37. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 What is a consumer market? 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 50:50 1 £100 A: Are markets for products and services bought by companies B: Are markets for products C: Are markets for products and services bought by individuals D: Are markets for services

  38. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 1 £100

  39. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 One function of the price mechanism is to?… 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 50:50 1 £100 A: Maintain price stability B: encourages government intervention C: Eliminates surplus allowing the price to rise D: Signal changes in consumer demand for good to a producer

  40. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 1 £100

  41. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 What does GDP stand for?.. 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 50:50 1 £100 A: Gross Domestic Product B: Great Domicile Proforma C: Global Dynamic Positioning D: Gross Domestic Price

  42. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 1 £100

  43. 15 £1 Million 14 £500,000 13 £250,000 12 £125,000 Which of these is going to happen next? 11 £64,000 10 £32,000 9 £16,000 8 £8,000 7 £4,000 6 £2,000 5 £1,000 4 £500 3 £300 2 £200 50:50 1 £100 A: Lesson objectives reflection B: All of the above C: Homework D: Plenary

  44. YOU WIN a million pounds

  45. Homework- Choose any of the two Question 1. Why are commodities such as oil and copper very important to small firms such as plumbers? Question 2 (A-C Students). How can an increase in cocoa prices affect the quality of Cadbury chocolate?

  46. Plenary Activity (2 minutes) • LEARNING OBJECTIVES: • Write in the A column how well you understand the lesson objectives! • 1 = Understand very well 5= Do not understand at all • We are learning to: A B • To understand that a market is made up of buyers and sellers. • To differentiate between supply and demand and be able to explain any diagrams. • To understand that the price of a good is determined by the interaction of demand and supply. • To recognise that a shortage will lead to a rise in price and a surplus to a fall in price. • To be able to recognise the difference between a normal market and a commodity market Supply and Demand

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