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Exploring Supply and Demand: Insights from Kobe Bryant, a Classic Corvette, and a Diamond

This educational piece delves into the fundamental concepts of supply and demand, using relatable examples such as Kobe Bryant, a 1962 Corvette, and a diamond. It explains the definitions of demand and supply, the law of supply and demand, and the concepts of substitution and income effects. The article also elaborates on the factors causing shifts in demand and supply curves and discusses equilibrium, excess demand, and excess supply. Concluding with a summary that ties together scarcity, choice, and the economic questions, it provides a comprehensive overview of market dynamics.

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Exploring Supply and Demand: Insights from Kobe Bryant, a Classic Corvette, and a Diamond

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Presentation Transcript

  1. Opening Pair-Share WHAT DO KOBE BRYANT, A 1962 CORVETTE, AND A DIAMOND HAVE IN COMMON?

  2. Supply and Demand

  3. What is Demand? The willingness to own a product and the ability to pay for it.

  4. What is Supply? The amount of goods available.

  5. The Law of Supply and Demand Supply and demand depend on and respond to price. If PRICE then, DEMAND and SUPPLY If PRICE then, DEMAND and SUPPLY

  6. What is the Substitution Effect? When consumers react to an increase in price, they • Consume less of that product • Find an alternative Example: movies vs. Netflix

  7. What is the Income Effect? A change in income will determine if you buy more or less of a product. Example: get raise, buy more clothes

  8. What is a Demand Curve?

  9. What is a Supply Curve?

  10. What Causes the S & D Curve to Shift? If S & D increases, the curve shifts right. If S & D decreases, the curve shifts left.

  11. What Causes the Demand Curve to Shift? • INCOME Normal Good: Something you buy more of if your income increases. (TV, NEW clothes) Inferior Good: Something you buy less of if your income increases. (USED clothes, inflatable pool)

  12. 2. CONSUMER EXPECTATIONS: Knowing the price will change affects your purchase.

  13. 3. POPULATION EX: Baby boom (need food, clothes, diapers, homes, etc.)

  14. 4. CONSUMER TASTES AND ADVERTISING: Changing trends.

  15. 5. RELATED GOODS COMPLEMENTS: Goods that are bought and used together. EX: DVD and DVD Player SUBSTITUTES: Goods used in place of one another.

  16. What Causes Supply to Change? • Cost of factors of production • Technology • Taxes/Govt. policies • # of firms in the marketplace • Weather

  17. What is Equilibrium? When Qd=Qs.

  18. What is Excess Demand? WhenQdis greater than Qs. (Shortage) What is Excess Supply? When Qs is greater than Qd. (Surplus)

  19. Summary IN ONE, LONG SENTENCE, MAKE A CONNECTION BETWEEN SCARCITY, CHOICE, FACTORS OF PRODUCTION, THE THREE ECONOMIC QUESTIONS, FREE ENTERPRISE, AND SUPPLY AND DEMAND.

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