Inside the Vault Oil. Demand and Supply It s What Economics Is About! Lesson Plan
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1 mand and upply It s What Eonoms Is About! Lsson lan Objtvs Upon omplton of ths lsson, studnts wll b abl to: 1. lst th dtmnants of dmand and supply; 2. ognz whh fatos wll aus dmand uvs o supply uvs to shft; and 3. dtmn qulbum usng a dmand/supply gaph, and show th ffts on p and quantty whn qulbum hangs. Eonom tandads Addssd TANAR 7 spton: Makts xst whn buys and slls ntat. Ths ntaton dtmns makt ps and thby alloats sa goods and svs. Contnt Kywods: makts; ps; podus; onsums; latv ps; qulbum p; quantty dmandd; quantty suppld; xhang at; shotag; suplus TANAR 8 spton: s snd sgnals and povd nntvs to buys and slls. Whn supply o dmand hangs, makt ps adjust, afftng nntvs. Contnt Kywods: ps; law of dmand; law of supply; substtut goods; dtmnants of dmand; dtmnants of supply; p lngs; p floos TANAR 9 spton: Comptton among slls lows osts and ps and nouags podus to podu mo of what onsums a wllng and abl to buy. Comptton among buys nass ps and alloats goods and svs to thos popl who a wllng and abl to pay th most fo thm. Contnt Kywods: omptton; lvls of omptton Insd th Vault png 2005 ag 1 of 2
2 tudnt Atvts tudnts wll bgn by adng th atl What s vng Ol s? n th spng 2005 ssu of Insd th Vault. Th tah an us th Tah Nots hand-out to xplan how th fos of dmand and supply st ps n a makt onomy. tudnts wll us th xampls n th atl to s how dmand and supply st th p and output. Th tah wll dsplay th ovhad tanspany masts o daw th gaphs wth th studnts to dmonstat gaphal analyss of dmand and supply. tudnts wll omplt th mand/upply Atvty ag ndvdually o n goups. Us attahd Answ Ky to hk th studnts wok. Matals Tah nots on dmand and supply Ovhad tanspany masts fo xampls fom th atl mand/supply atvty pag Answ ky fo atvty pag Insd th Vault png 2005 ag 2 of 2
3 mand and upply Atvty Woksht On ah of th dmand/supply gaphs povdd, mov th dmand o supply uv to ndat th nflun of ths statmnts on th makt fo ol. Indat th fft on p and quantty. I. Th sng populaty of hybd vhls. II. Th nasng us of plasts to podu a wd ang of poduts. Insd th Vault png 2005 ag 1 of 2
4 III. A slowdown n th poduton of ud ol woldwd. IV. Congssonal aton that allows ol-dllng opatons n mo aas of th Alaska psv. Insd th Vault png 2005 ag 2 of 2
5 Insd th Vault Ol Answ Ky fo mand and upply Atvty Woksht On ah dmand/supply gaph povdd, shft th dmand o supply uv to ndat th nflun of ths statmnts on th makt fo ol. Indat th fft on p and quantty. I. Th sng populaty of hybd vhls II. Th nasng us of plasts to podu a wd ang of poduts Insd th Vault png 2005 ag 1 of 2
6 Insd th Vault Ol III. A slowdown n th poduton of ud ol woldwd IV. Congssonal aton that allows ol-dllng opatons n mo aas of th Alaskan sv Insd th Vault png 2005 ag 2 of 2
7 ownslopng mand Cuv mand uantty Upslopng upply Cuv upply uantty Insd th Vault png 2005 ag 1 of 4
8 upply Equlbum mand uantty Equlbum n th Ol Makt Insd th Vault png 2005 ag 2 of 4
9 Inasd dmand fom Chna and Inda movs th dmand uv to th ght both p and quantty of ol sold nas uantty Nw Equlbum n th Ol Makt Insd th Vault png 2005 ag 3 of 4
10 asd supply ausd by tumol n th ol-podung ounts movs th supply uv to th lft th p nass, but th quantty of ol sold dass Nw Equlbum n th Ol Makt Insd th Vault png 2005 ag 4 of 4 uantty
11 Tah Nots on mand and upply Ovvw How hgh wll th p of gasoln go? was th ladng quston on NBC s Nghtly Nws ntly. Th pot talkd about th fos of dmand and supply that l n th hat of onoms. In a makt onomy, ths fos dvn by dsons of buys and slls st th p and quantty of a good o sv. Th ntaton btwn th dmands and suppls of goods and svs ats th qulbum n th makt, wh th p and th quantty a mutually aptabl. mand Buys xhbt both wllngnss and ablty to puhas goods and svs. Th wllngnss and ablty to puhas may vay n spons to p. mand s a od of how popl's buyng habts hang n spons to p. It s a whol ss of quantts that onsums wll buy at th dffnt p lvls at whh thy wll mak ths puhass. A dmand uv s a dv that shows th latonshp btwn p and quantty n th makt fom th buys vwpont. Th dmand uv s downwad slopng to th ght baus as th p nass, th quantty dmandd dass. Ths s an nvs latonshp, whh maks sns sn buys annot buy as muh of a good o sv whn th p nass. mand uantty Insd th Vault png 2005 ag 1 of 5
12 Th dmand uv an shft to th ght o lft as ondtons n th makt hang. Nonp dtmnants of dmand aus ths hangs. upply 1) Inom: Havng mo o lss to spnd affts ndvdual dmand shduls. Fo most goods, an nas n nom lads to a ghtwad shft n th dmand uv. Fo nfo goods, an nas n nom lads to a lftwad shft, sn ths a usually low-qualty tms that popl wll avod whn thy hav mo mony to spnd. 2) Tast and pfns: Th us that a good o sv povds an asly hang and afft dmand. What was on pvd as usful o uslss, stylsh o ugly, halthy o dangous now an bom ts oppost. 3) Complmntay goods: Th lnkag of poduts that "wok" wth ah oth an afft th dmand fo ah. 4) ubsttuts: Whn th ps of o pfn fo a substtut hangs, dmand fo both poduts wll hang. 5) Numb of buys: mand dpnds on th sz of th makt. 6) xptatons of buys: uhass may b postpond o ushd dpndng on th xptatons of futu p hangs by th buy. 7) Consum nfomaton avalabl: Infomaton about th podut, th p, and th bnfts o osts of a good o sv may b sa and may afft th dmand fo that good o sv. uppls sll fnshd goods o svs. upply s th quantty of goods and svs that busnsss a wllng and abl to podu at dffnt ps dung a tan pod of tm. upply s a od of how busnss's poduton habts hang n spons to p. A supply uv s a dv that shows th latonshp btwn p and quantty n th makt fom th slls vwpont. Th supply uv s upwad-slopng, lft-to-ght, baus as th p nass, th quantty suppld nass. Ths s a dt latonshp, whh maks sns baus slls wll not off as muh fo sal at low ps sn poft s th motv. Insd th Vault png 2005 ag 2 of 5
13 upply uantty Th supply uv an shft to th ght o lft as ondtons n th makt hang. Non-p dtmnants of supply aus ths hangs. 1) oduton osts: Ths s th most mpotant and th most typal ason fo hang. Th p of ngdnts, aptal goods, nt o labo hangs and movs th supply uv. Nw thnology ould mak podutons mo o lss xpnsv. 2) s of goods usng sam sous: A dmand fo a spf sou s nasd whn oth podus bd up th p n spons to nasd dmand fo th podut. 3) Changs n thnology: Nw nnovatons n aptal sous an hang th avag ost of poduton. 4) Taxs and subsds: Taxs nas osts; subsds low osts. 5) Futu p xptatons: odus' onfdn n th futu, oftn dffult to quantfy o justfy, afft th amount of a good o sv that thy wllng to podu. 6) Numb of slls: Busnsss nt and xt a makt gulaly basd on a vaty of asons; so, hangs n th numb of podus wll afft th supply of th podut. 7) Tm ndd fo poduton: In a makt pod, no addtonal podut an b podud qukly. o, n th shot un only vaabl osts an b hangd to nabl podus to supply mo of a podut. In th long un, all osts a vaabl, and any amount of nw sous an b addd. Insd th Vault png 2005 ag 3 of 5
14 Ahvng Equlbum Wh th dmand and supply uvs ntst s th qulbum that dtmns th pont at whh p and quantty sold a dtmnd. upply Equlbum mand uantty Equlbum s th p towad whh makt atvty movs. If th makt p s blow qulbum, th ndvdual dsons of buys and slls wll vntually push t upwad. (aty of th good wll aus ts p to b bd up by thos who a wllng to buy th good.) If th makt p s abov qulbum, th oppost wll tnd to happn. pndng on makt ondtons, mmdatly o n th futu, p and quantty wll mov towad qulbum as buys and slls ntutvly and logally ay out th laws of dmand and supply. Th ablty of th ompttv fos of dmand and supply to stablsh a p at whh sllng and buyng dsons a onsstnt s alld th Ratonng Funton of. Insd th Vault png 2005 ag 4 of 5
15 How to Us th Lad Atl ( th ovhad mast fo th gaphal analyss). Th nw uss fo ol n Chna and Inda a latd to tast and pfn and numb of buys as dtmnants fo th gat dmand. Th dmand uv wll shft to th ght, and a hgh p and a lag quantty of ol sold wll b th sult. Th tumol n ol-podung aas dus th numb of bals of ol xtatd ov tm, and th damag to ol wlls n Iaq, as notd n th atl, wll hav a long-un fft on th supply n th ol makt. Ths two fatos wll mov th supply uv to th lft and aus th p to nas and th quantty of ol sold to das. pulaton dvs many makts, and ol s no xmpton. Th futus makt s appopatly namd sn vaous ndvduals a gussng what wll happn to th dmand and supply fo ol n th futu. In som makts, spulaton an aus havo, nasng p and lowng output. Whn ths spulatv aton gts out of ontol, a makt an ash o, as an onomst would say, Th bubbl s bust. Oth fatos an also afft th ol makt. Anythng that nass poduton osts an mov th supply uv, whl hangs that afft dmand suh as th huans, o Ama s fasnaton wth bg tuks and UVs an mov th dmand uv. Fo ths asons, th s pssu on th p of ol. Consums an xpt th ps to stay hgh unlss nw sous of ol a tvd and possd and/o th dmand fo ol by Amans and th st of th wold s dud. Insd th Vault png 2005 ag 5 of 5
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