What do beanie babies and tulips have in common Think like an economist Agenda 1 Go over HW 2 Going over changes in the demand curve 3 Nonprice determinants of Demand 4 Answering the Economic Puzzle ID: 464227
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Slide1
Entrance Ticket
What do beanie babies and tulips have in common? (Think like an economist)Slide2
Agenda
1) Go over HW
2
) Going over changes in the demand curve
3) Non-price determinants of Demand4) Answering the Economic Puzzle5) Exit Ticket
¡Small PPC Quiz On Friday!Slide3
HW: Calculating Market Demand
Point
Price per
Scoop of Ice Cream
Quantity Demanded per Year
A$62B
$56
C
$4
9D$314
Point
Price per
Scoop of Ice Cream
Quantity Demanded per Year
A
$6
5
B
$5
8
C
$4
11
D
$3
22Slide4
Graphing the relationship between price and demandSlide5
Market Demand = the sum of all individual demand curvesSlide6
Understanding changes in the demand curve
1)
Change in quantity demanded: A movement between points
along a stationary demand curve
, ceteris paribus
2) Change in demand: An increase or decrease in the quantity demanded at each possible price. An increase in demand is represented by a rightward shift while a decrease in demand is represented by a leftward shift
Caused by changes in price
Caused by
nonprice
changesSlide7
Graphs of Changes in Demand CurveSlide8
Nonprice
Determinants of Demand
Change in Market SizeChange in Buyer Preferences
Change in Buyer Expectations
Change in Buyer Income
Change in Price of Related Goods
Will look at these today
Will look at these later in the weekSlide9
More
Buyers = More Demand
D
market
= D
1 + D2 + …DnThe more individual demands, the higher the total market demand (works in reverse too)Slide10
Buyer Tastes and Preferences
A favorable or unfavorable change in consumer tastes or preferences means more or less demandSlide11
Shifting Demand Curve Practice
Point
Price per
Scoop of Ice Cream
Quantity Demanded per Year
A$615B
$522
C
$4
33D$349
Point
Price per
Scoop of Ice Cream
Quantity Demanded per Year
A
$6
3
B
$5
9
C
$4
16
D
$3
29
Now, after Fro-
Yo
became more popular:
Now, after a boom in population: Slide12
Back to the Entrance Ticket
Examine the two case studiesAnswer the question using lessons from today’s classSlide13
Case Study 1: Beanie Babies
(2013)Slide14
Divorced
couple ordered to divide Beanie Babies collection in courtSlide15
Case Study 2: TulipsSlide16
So what do they have in common?
There was high demand in the product UNTIL buyer preferences changed and then they went out of style
Consequence: People who tried to capitalize on each craze ended up losing out because the products lost tremendous amounts of value
Beanie
Babies documentary: https://
www.youtube.com/watch?v=PgDsyj5eLmoSlide17
Exit Ticket
What are some “fads” that have come and gone in your lifetime?
How were you, as a consumer, impacted by these “fads”?