ECON 201 Section 2
Handout 5-1 (10 points)
Consider the market for movie tickets. Ask three friends, “At a price of $10 per movie ticket, how many tickets would you buy in a month?” Allow them to believe that there are an ample number of movies they will want to see in the theater and that they should include tickets for friends to go with them, if they want to buy those.
Continue questioning the same three students for each price level in the chart below.
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Price
(per ticket)
|
Quantity
(tickets)
demanded
per month
|
Quantity
(tickets)
demanded
per month
|
Quantity
(tickets)
demanded
per month
|
Total
market demand schedule
|
|
|
Name of Friend 1
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Name of Friend 2
|
Name of Friend 3
|
|
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$10
|
|
|
|
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8
|
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6
|
|
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4
|
|
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2
|
|
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0
|
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Ask the classmates what other things they considered when deciding how many tickets they would buy. Record their answers here.
Add the quantities of tickets each classmate will buy at each price level (i.e., add the numbers across the rows). Record this sum in the last column. What happens to the number of tickets each student will buy as the price falls?
Draw the market demand curve on the graph below. Be sure to label the axes.
Handout 5-2 (10 points)
Shifts and Movements Along the Demand Curve
Decide whether the following examples indicate a shift of the demand curve or a movement along the demand curve. Mark the correct column.
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Example
|
Movement along the demand curve
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A shift in the demand curve
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1. Mammoth Mountain hikes the price for ski tickets and sales plummet.
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2. Lack of snow keeps the skiers away.
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3. An excise tax increases the price on
cigarettes and causes younger smokers to quit.
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4. Cutting cigarette ads from TV causes cigarette smoking among teens to fall.
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5. Nike sales fall as Sketchers shoes gain popularity.
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6. The high price of Nike Air Jordans mean a small number of teenagers buying them.
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7. Mortgage rates are at an all-time low, and new home loan applications soar.
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8. A booming economy spurs home sales.
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Handout 6-1 (10 points)
Consider the market for movie tickets. Ask three classmates, “At a wage of $50 per hour, how many hours (between 0 and 40) would you work a week?”
Continue questioning the same three students for each wage level in the chart below.
|
Wage
(per hour)
|
Number of
hours worked
each week (up
to 40)
|
Number of
hours worked
each week (up
to 40)
|
Number of
hours worked
each week (up
to 40)
|
Total
market
supply
schedule
|
|
|
Name of Student 1
|
Name of Student 2
|
Name of Student 3
|
|
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$50
|
|
|
|
|
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30
|
|
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20
|
|
|
|
|
|
10
|
|
|
|
|
|
5
|
|
|
|
|
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2
|
|
|
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|
Ask the classmates what other things they considered when deciding how many hours they would work. Record their answers here.
What happens to the number of hours each student will work as the wage falls?
Add the quantities of tickets hours each classmate will work at each wage level (i.e., add the numbers across the rows. Record this sum in the last column.
Draw the market supply curve on the graph below. Be sure to label the axes.
Handout 6-2 (6 points)
Shifts and Movements Along the Supply Curve
Decide whether the following examples indicate a shift of the supply curve or a movement along the supply curve. Mark the correct column.
|
Example
|
Movement along the supply curve
|
A shift in the supply curve
|
|
1. As home prices rise, more people put out a For Sale sign.
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2. Personal bankruptcies rise with the recession, forcing homeowners to sell.
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3. College grads avoid teaching jobs as starting salaries fall.
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4. Worsening working conditions in urban schools chase away prospective teachers.
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5. As the price of airline tickets rises, airlines add more flights.
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6. The price of jet fuel drops and airlines expand the number of flights.
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Handout 6-3 (8 points) A Ticket Shortage
Imagine the following scenario:
You are responsible for a concert on campus and have sold out all the tickets at $20 apiece. Unfortunately, there are 100 students outside the concert who still want to get in and are angry and frustrated.
Answer the following questions:
1. Is $20 the equilibrium price?
2. How do you remedy the ticket shortage?
3. Label each of the following graphs to identify what kind of solution it represents for the ticket shortage.
4. Which solution would fans prefer? Concert organizers?
Handout 7-1 (6 points)
Applying Analysis to a News Article: Supply and Demand
Using an article from a newspaper, magazine, or relevant online source that is about a specific market and that indicates a change in price of the product.
1. Identify the relevant market.
2. Describe the nature of the change in the market: shift in demand or shift in supply.
3. Describe the direction of the shift.
4. Describe what induced the shift.
5. Indicate the effect of the shift on the equilibrium market price.
6. Indicate when you can predict the change in the equilibrium quantity, and indicate when you cannot.
Handout 7-2 (10 Points)
Changes in the Equilibrium Price
Fill in the blanks.