Social Studies 9 - 2nd Quarter Notes PDF

SUJHS SOCIAL STUDIES 9 SECOND QUARTER NOTES LAW OF DEMAND ★ DEMAND CURVE ○ Is the inverse relationship between price and...

SUJHS SOCIAL STUDIES 9 SECOND QUARTER NOTES LAW OF DEMAND ★ DEMAND CURVE ○ Is the inverse relationship between price and quantity demanded, represented by a the claim that the quantity demanded of a good falls downward sloping curve. when the price of the good rises, other things equal. ★ DEMAND ○ It is the willingness and the ability of buyers to purchase goods and services. ★ QUANTITY DEMANDED ○ It is the amount of the good buyers are willing and able to purchase at specific prices. ★ BUDGET LINE ○ A straight line that slopes downward and consists of all the possible combinations of the two goods which a consumer can buy at a given market price by allocating all his/her income. ★ DEMAND SCHEDULE ○ Table that shows the quantity demanded of a good or service at different price levels. Price per piece (P) Quantity Demanded (Qd) 14 1 ★ UTILITY 12 2 ○ the satisfaction or the value derived from the consumption of good. 10 3 8 4 ★ MARGINAL UTILITY ○ the extra satisfaction that an individual derives 6 5 from the consumption of an additional unit of good within a given period, keeping other 4 6 things constant. 2 7 ★ LAW OF DIMINISHING MARGINAL UTILITY  SUJHS SOCIAL STUDIES 9 SECOND QUARTER NOTES ○ The marginal utility of a good or service declines as more of it is consumed by an 4. NUMBER OF CONSUMERS individual. ○ The more people there are, or the higher the population growth rate of a country, the more potential consumers there are. PRICES OF RELATED GOODS IN CONSUMPTION ○ Substitute goods ○ Complementary goods PRICE ELASTICITY OF DEMAND Price elasticity of demand is the ratio of the percentage change in quantity demanded of a product to the percentage change in price. Economists employ it to understand how supply and demand change when a product's price changes. FACTORS AFFECTING DEMAND ★ INELASTIC 1. INCOME ○ That is a reduction in price does not increase ○ An increase in income means that the demand much, and an increase in price does consumer has a greater ability to buy goods not hurt demand, either. (Ed > 1) and/or services. Thus, a higher income generally translates into an increased demand ★ ELASTIC for most goods. ○ If there is price change for these goods, they Normal Goods cause substantial changes in their demand. (Ed Quality goods < 1) Inferior Goods Not high-end ★ UNITARY ○ Changes in price yield equivalent (percentage) 2. TASTES AND PREFERENCES changes in demand. (Ed = 1) ○ Our tastes and preferences influence our demand for goods and/or services. ★ PERFECTLY INELASTIC ○ Changes in price yield no change in demand 3. EXPECTATIONS (Ed = 0) ○ Expectations also shape our demand for goods and/or services. The onset of the rainy season can cause an increase in the demand for canned/tinned goods like sardines as well as noodles and other ready-to-eat and easy-to-cook items.  SUJHS SOCIAL STUDIES 9 SECOND QUARTER NOTES LAW OF SUPPLY ★ SUPPLY ○ the entire range of quantities of a specific good or service that producers are willing and able to offer for sale at different prices in a given time period. ★ QUANTITY SUPPLIED ○ the specific quantity of a good or service that FACTORS AFFECTING SUPPLY producers are willing to supply at a particular price point 1. PRICE OF RELATED GOODS IN SUPPLY OR ★ THE LAW OF SUPPLY PRODUCTION ○ The higher the price, the higher the quantity ○ Most inputs or factors of production can be supplied. Lower prices mean reduced supply, used to produce a multitude of products and all else held equal. services. Thus, when the price of any of these related goods in production changes, the ★ SUPPLY SCHEDULE supply of the other related goods is affected. ○ a tabular representation of the quantity a. Substitute goods supplied at different prices two or more goods that can be produced using the same resources. b. Complementary goods Price (P) Quantity Supplied (Qs) two or more goods that are jointly 0 0 produced using a given resource. 2 1 4 2 6 3 8 4 ★ SUPPLY CURVE ○ a graphical representation of the quantity supplied at different prices, in upward slope. 2. TECHNOLOGY ○ A technological innovation which reduces cost will allow producers to supply more of the good at any given price.  SUJHS SOCIAL STUDIES 9 SECOND QUARTER NOTES 3. PRICES OF INPUTS OR FACTORS OF PRODUCTION ○ When the prices of factors such as labor, raw materials, energy, and capital increase, the overall cost of producing goods or services rises. Higher input costs generally lead to a decrease in the profitability of production. 4. PRODUCER EXPECTATIONS ○ If producers expect the price of their product to increase in the near future, they may hoard their product and store it for later sale. However, when producers expect the price of their product to fall in the near future, the supply of the good may increase at present as producers try to dispose of their inventory at the current higher price. 5. NUMBER OF PRODUCERS ○ As the number of producers in a market increases, the total output or supply of goods and services is likely to increase as well. Each producer contributes to the overall quantity of goods available in the market. PRICE ELASTICITY OF DEMAND FORMULA