What is elasticity of demand?

Elasticity refers to the responsiveness of demand to a change in price.

Inelastic goods are goods that people buy at about the same amount no matter if the price goes up or down.  Examples are gasoline and cigarettes.

Elastic goods are things that people will really change their purchases of in response to changes in price.  Examples are vacation packages and house cleaning services. 

Link to Marketplace clip - Sunscreen

Marketplace - Sunscreen

https://youtu.be/pXoZYyag9-0

QUESTIONS

a)      What is happening to the demand for higher SPF sunscreens?  Why is this?  Draw a graph.

b)      Is the price of higher SPF sunscreens higher than that of lower SPF sunscreens? (Ask another person if you are not sure)

c)       We have talked about the importance of information in effective markets.  Do consumers know all the information they need to know about sunscreens, according to this program?  How can businesses capitalize or even take advantage of consumers if consumers are not informed?  Do you think they are doing this?

d)      Apply the concept of diminishing returns to sunscreen SPF levels.

Link to 60 Minutes - China's Real Estate Bubble

60 Minutes - China's Real Estate Bubble

https://youtu.be/VaNAfGBIw1s

Article - updated information on this issue

QUESTIONS

a)      Which sector of the Chinese economy has become prominent in the last number of years as a driver of growth?

b)      What are Chinese people investing in?  Why?

c)       What is this doing to the demand for housing?  Show on a graph and explain what this is doing to the price.

d)      Urbanization means people are moving from the country to the city.  Does this affect the graph in the previous question?  Do they have a demand for these apartments?  Explain.

e)      What has happened to the supply of condo housing in China?  What has happened to the supply of low-income housing in China?

f)       Explain the one-apartment policy in China.  Draw a graph to show how this has affected prices.

g)      How are developers getting the money to finance all this building?

h)      What is a bubble? (You may need to research this)

i)        We have learned about some of the drawbacks of a command economy.  Give an example of one of these from the video.

Indiana Jones lesson - Demand, Supply, and Changing Equilibrium

A good review on Demand, Supply, and Changing Equilibrium

Click here to see video

How can we use demand and supply curves to show changes in equilibrium price and quantity?

We have been using graphs and working through many examples, both straightforward and more complicated.

Do. p. 88 Q. 1-3, p. 90 Q. 1,2, and questions from exercise sheet.

What is equilibrium?

It is the point where the demand curve and the supply curve intersect. A better description of equilibrium price is the market-clearing price. Everything brought to market at that price is sold.

Excess supply/surplus occurs when the price is above the equilibrium price.

Excess demand/shortage occurs when the price is below the equilibrium price.

Alfred Marshall's quote appears on page 79.

What is Supply?

The supply of goods or services in a market is the amount that producers are willing to put on the market for sale. It is not necessarily the total stock of goods, as sometimes producers hold back for various reasons (eg. to influence the price, or in anticipation of higher future prices).

The supply curve is upward sloping, as there is a direct relationship between the price and the amount supplied. Ceteris paribus, if price goes up, supply goes up.

Microeconomics - Markets and Demand

Here are 3 lectures that are very similar to what we went over this week. She gets into a bit more math than I do in the first one but the ideas and even how she does her graphs are exactly what I was taught and what I will be teaching you! All are under 10 minutes long and although they are not meant to be entertaining they are a really good overview of the topics.

Lecture #1 - DEMAND
http://www.youtube.com/watch?v=Zlg8JCSWdrA

Lecture #2 - DETERMINANTS OF DEMAND
http://www.youtube.com/watch?v=JWuHCaqDmck&feature=relmfu

Lecture #3 - SHIFTING DEMAND CURVES
http://www.youtube.com/watch?v=3tybNSz7thI&feature=relmfu

Economic Goals for Canada

These include full employment, economic freedom, environmental stewardship, and keeping the level of government debt at a low, manageable level. Some of these will conflict (eg. full employment and low inflation) and tough choices need to be made.

What are the advantages and disadvantages of the command and market systems?

See page 33 in your textbook for a good organizer for thinking about economic systems.Read up to page 37 in your textbook.