Wednesday, January 31, 2007

Intro to Supply & Demand

Here's some links to help you get started on S & D:

http://www.reffonomics.com/demand1.html (demand - animated gif)

http://apecon.us/currentwork/substitutionincome.gif (substitution & income effect - animated gif)

http://www.reffonomics.com/determinatesofdemand.html (determinants of demand - animated gif)

http://www.reffonomics.com/determinatesofsupply.html (determinants of supply - animated gif)


Food court simulation - due Friday unless you need until Monday. It's up to the sub, really. You need to do the math-y stuff, and determine as a group which 5 restaurants you'd chose, and why.

Enjoy your weekend! :)

KM

17 comments:

domino said...

i have a question, what is the difference between a fiscal policy and a monetary policy? because i seems to me that monetary policy would include fiscal policy...

Kate said...

i am confused as to what exactly is total revenue...how does it differ from profit, or ar they pretty similar?

KM said...

Question #1 -

Fiscal policy is what Congress & the President do to control GDP, inflation & unemployment. (This is all macro) This would be taxes (income, etc) and spending policies (getting people to build more airplanes).

Monetary policy is what the Federal Reserve does to control GDP, inflation & unemployment. They control the money supply (amount of money in the economy at any given time). They change the interest rates, control the purchase and selling of government securities (like treasury bills) and through the reserve requirement, which is how much cash a bank must keep in their vaults at all time.

The head of the Fed is a man by the name of Ben Bernanke - easily the most powerful man in the US economy. It used to be my hero, Alan Greenspan, until he retired last year. :)

KM said...

Question #2 -

Total revenue is only the amount of money that is brought in to a business when something is sold. It doesn't take into account how much it cost to make that good (or service).

So - you buy a CD at Kmart. It costs $15. The total revenue is $15 x 1 = $15. (TR=PxQ) This doesn't take into account how much Kmart had to pay for that CD from their supplier - it's just the revenue.

If I sell 5 bridesmaid's dresses at $100 each, that's a total revenue of $500. Then, to find my profit, I have to take out the cost of the material, zippers, thread - etc. What remains would be profit.

Better? :)

Ashley said...

About the picture...no i didnt take the one posted, it looks similiar. When i get the pictures from the trip on i'll post one. Just to remind us all of what we wished we had here when its -10 degress on Sunday!

Erica said...

ok so i know i am going to sound incredibly dumb buthow do i post a blog on this thing? haha sorry

rageena said...

uh... do we really need to do a five minute presentation?

rageena said...

oh! and I clicked on the first link and all it said was 'demand' and then 'demand' again, but on a slant.

KM said...

No presentations. Turned in only.

:)

I'll check the link on the other.

KM said...

Erica -

To post a blog, sign in at http://www.blogger.com.

Once you log in, you should get to a page that has a "control panel" (mine pops up as soon as I log in from the main page). If you haven't already set up a blog with a title and everything, you can from there.

Then, do a "new post". That should get you to where you need to be!

theczyzewicz said...

wow, this page is still up and running?! haha i remember the good ol' days in AP Econ, I got so stressed out about the tiniest things that I didn't understand, but Mrs. McDaniel always made me understood...Where did this class get me? Well, I got a 4 on my AP exam, which got me 3-4 credits at UW-Madison. that was a pretty sweet deal. My boyfriend is currently taking an econ class, and looking at his homework and book brings me back to last year...This is a great class, good luck to you all!

theczyzewicz said...

*correction*
she always made me understand****
yeah that made me look like i didn't deserve to get into madison :P

KM said...

Hey, Michelle - thanks! :)

You rock - a 4 is awesome!

Wojtek said...

Thanks Michelle. I hope all of us will pass this test at least for 4.

Ms. McDaniel could you show us a sample exam sheet? Just to see what is waitng for us.

ENJOY the game everyone!

BTW: Michelle Czy┼╝ewicz- another lovely sounding Polish name:)

Raveen Shah said...

How does the government determine the equilibrium price for a price floor when the market is in disequilibrium?

Dan said...

Raveen, I think the price is determined by some formula that determines where people will still buy the product while allowing enough money to be made by the producers of the product. The government probably gets some sheet like we did for the simulation giving them info about the products, am I right Mrs. D?

KM said...

Usually, it's politics. They'll hear all the info, they'll get all the numbers, but it will depend on who is talking/complaining the most and has the most influence on lawmakers.

Example: Price floors are artificially set above equilibrium. So it's like the minimum wage - you can't go below that price. Who fights for higher minimum wage? Min wage workers. Who has influence with lawmakers? Not min wage workers. If min wage was set as a living wage (a family could survive on it with a 40 hour work week) it would have to be over $10 an hour.

Another example: umm...price supports for farmers. Corn can't go below x price, wheat, bacon, milk (especially milk!) - all of those are set by the govt. But - farmers have more pull with lawmakers. Why? Because the rest of us don't really care about milk prices - milk is milk, and we'll buy it if we want it (that's called elasticity). There isn't a huge group of people who get together to fight price supports for farmers - it's just not the American way to go against the farmer like that.

So - they get the numbers, but then it's really who talks the loudest. Scary, hey?