Economics: New Ways of Thinking Ancillary Sampler

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2 Economics: New Ways of Thinking Ancillary Sampler Thank you for your interest in EMC Publishing s Economics: New Ways of Thinking! By now you have probably discovered why we were so excited to offer our new textbook that teaches basic economics principles through powerful real-world examples. We are equally excited to present the robust ancillaries you will use to energize your teaching of this program. The key ancillaries were written by outstanding teachers who know what you and your students need and want. This booklet contains Chapter 4 of each print ancillary included in our newest economics program. Please note that we also offer teacher s editions for three of these supplements: Applying the Principles Workbook, Guided Reading and Study Guide, and Finding Economics. If you would like to review the complete versions of any of the ancillary components, please call Table of Contents Introduction Pages 1 2 Assessment Book: Tests and Quizzes with Answer Key Pages 3 14 Applying the Principles Workbook Pages Guided Reading and Study Guide Pages Finding Economics Pages Lesson Plans Pages Daily Lectures: Overheads and Notes Pages 63 72

3 Use the Complete Print Ancillary Program! Assessment Book: Test and Quizzes with Answer Key See pages 3 14 One quiz for each section of the book (50 quizzes total) Two tests for each chapter of the book (32 tests total) Applying the Principles Workbook, and Teacher s Edition See pages Exercises that reinforce the textbook material and apply it to new situations One activity for each section of the book, plus extra practice on demand and supply More than 80 charts, graphs, and figures Guided Reading and Study Guide, and Teacher s Edition See pages For each section of the book, one handout that summarizes key points in simple language for students who read below grade level, and one outlining activity For each chapter of the book, one vocabulary activity, one graphic organizer activity, one graphs and tables activity, and one practice test Finding Economics, and Teacher s Edition See pages Fictional, high-interest short stories embedded with economics principles, one story for each chapter of the book Content that builds cross-curricular connections required in state standards Lesson Plans See pages Detailed lesson plans for every section of the textbook Daily Lectures: Overheads and Notes See pages and pocket inside back cover Lecture notes with easy-to-follow narratives presenting key ideas, formatted so that they can be used to make overhead transparencies Full-color transparencies for the most important and difficult economics principles, charts, graphs, and formulas INTRODUCTION 1

4 Energize with Technology! Test Generator CD ExamView test generator on CD-ROM, with over 1,800 questions Ability for teachers to select, create, and edit tests and quizzes Spanish Audio CD Spanish audio segments summarizing key points from each section of the book Marketplace CD Audio segments from the radio show Marketplace, two for each chapter of the textbook Lesson plan for all the audio segments, plus student handouts and worksheets Economics Principles Lectures, Videocassette and DVD Lectures on key economics principles, presented by the textbook author, Roger A. Arnold Internet Resource Center Study Guide One outline for each chapter, including all subheads and key terms, with study questions for students to answer Ability for students to save, modify, and print the outlines Crossword Puzzles One crossword puzzle per chapter, covering the key terms Current Events Lectures/Lessons New lessons based on current events Printable lesson plans, transparencies, worksheets, and handouts Practice Tests Review and reportable tests Lesson Plans Detailed lesson plans for every section of the textbook Economics in Action: Student CD Fun, animated, interactive, and engaging CD for students, including the following features: English and Spanish audio summaries Crossword puzzles English and Spanish flash cards Flash/video lessons on key graphs, charts, formulas, and figures, with related exercises Review and reportable tests 2 INTRODUCTION

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6 Name: Date: CHAPTER 4, SECTION 1 QUIZ Sentence Completion For questions 1 5, write the word or phrase that best completes each sentence on the line provided. 1. The numerical representation of the law of demand is called a(n). 2. When buyers are willing and able to purchase different quantities of a good at different prices, it demonstrates their for the item. 3. The of a good will increase or decrease as a result of a price change. 4. A(n) exists in any place where people come together to buy and sell goods or services. 5. The states that as prices increase, the quantity that buyers will purchase will decrease. True or False Mark statements 6 10 true or false by writing T or F on the line provided. 6. Demand curves do not include straight lines. 7. Demand schedules and demand curves contain the same information presented in different ways. 8. Buyers have demand for a good or service whenever they have enough money to purchase the item. 9. The law of diminishing marginal utility states that consumers value the first unit of a good more highly than an additional unit of the same item. 10. A demand schedule lists only prices. 4 Assessment Book SAMPLE EMC Publishing

7 Name: Date: CHAPTER 4, SECTION 2 QUIZ Sentence Completion For questions 1 5, write the word or phrase that best completes each sentence on the line provided. 1. A(n) is something for which the demand remains unchanged as income rises or falls. 2. Two goods are if they are consumed together. 3. If demand for a particular good falls as income rises, it is called a(n). 4. A good that can be used in place of another good is called a(n). 5. are those things for which the demand rises as income rises and falls as income falls. True or False Mark statements 6 10 true or false by writing T or F on the line provided. 6. If the demand for chocolate increases, the demand curve shifts to the left. 7. A shift of the curve and a movement along the curve are the same. 8. Price is the only factor that causes a change in quantity demanded. 9. Popcorn and butter would be classified as complementary goods. 10. A shift of the curve means that the curve moves either right or left. EMC Publishing Assessment Book SAMPLE 5

8 Name: Date: CHAPTER 4, SECTION 3 QUIZ Sentence Completion For questions 1 5, write the word or phrase that best completes each sentence on the line provided. 1. exists when the percentage change in quantity demanded is less than the percentage change in price. 2. The concept of demand that deals with the relationship between price and quantity demanded is called. 3. A(n) is considered a reasonable replacement for something. 4. When buyers will purchase the same amount of a good, even though the price has increased, the demand for that item is. 5. Demand is when the percentage change in quantity demanded is the same as the percentage change in price. True or False Mark statements 6 10 true or false by writing T or F on the line provided. 6. In the elasticity equation, the numerator is percentage change in quantity demanded. 7. If movie prices increase by 30 percent and attendance (quantity of tickets demanded) drops by 40 percent, demand is considered inelastic. 8. Time is one of the factors that determine elasticity of demand. 9. Buyers are more responsive to price changes for goods on which they spend a larger percentage of their income. 10. If demand is inelastic and price decreases, total revenue will decrease. 6 Assessment Book SAMPLE EMC Publishing

9 Name: Date: CHAPTER 4, TEST A True or False Mark statements 1 30 true or false by writing T or F on the line provided. 1. A demand curve is a graph that may contain a straight line that slopes downward from left to right. 2. If demand for VCRs decreases, the curve would shift to the left. 3. Price is the only factor that can cause a change in quantity demanded. 4. Elasticity of demand deals with the relationship between price and quantity demanded. 5. Elasticity is really measuring consumer response to a price change. 6. Price has no impact on how much consumers will buy. 7. One of the most important factors in determining whether or not the demand for a product is elastic is whether or not substitutes for it exist. 8. Insulin and heart medicine are examples of inelastic goods. 9. Chocolate bars, tropical vacations, and automobiles are all elastic goods. 10. The law of demand states that consumers will buy more of a product at lower prices. 11. If a good has many substitutes, it can be considered inelastic. 12. The law of demand states that as prices rise, the quantity demanded rises also. 13. Economists state that the more utility you receive from an item, the higher price you are willing to pay for it. 14. If you eat six slices of pizza, you are likely to get the same satisfaction from the last piece as you enjoyed with the first piece. 15. Demand and quantity demanded are basically the same. 16. A demand schedule is a list of prices and the quantities demanded at each price. 17. Demand curves slope upward from left to right. 18. Whenever demand for a good changes, the demand curve for that good shifts to the right or the left. 19. As income rises, demand for normal goods rises. EMC Publishing Assessment Book SAMPLE 7

10 20. Leading experts in the field of economics can predict with certainty when an economic event will occur. 21. One critical determinant of elasticity is whether or not substitutes exist. 22. In the elasticity equation, the percentage change in price is always on the top over the percentage change in the quantity demanded. 23. If a seller increases the price of a good, it will always bring about an increase in total revenue. 24. Elasticity of demand is important to economists only; business owners don t need to understand advanced economic concepts like elasticity. 25. Quantity demanded is determined by price. 26. One factor that determines demand is people s preference. 27. Pepsi and Coke can be considered substitutes. 28. Future price has no relationship to current demand. 29. A movement along the demand curve to a different point illustrates price change on a graph. 30. Inelastic demand is usually associated with demand for luxuries. Multiple Choice For questions 31 40, write the letter of the best choice on the line provided. 31. The prices consumers pay are determined by a. chance. b. producers. c. markets. d. advertising. 32. A market is any place a. where buyers and sellers meet. b. where only sellers offer goods for sale. c. with a sign designating a store. d. where fruits and vegetables are sold. 33. In economics, demand means a. willingness and desire to buy a good. b. willingness and ability to buy a good. c. ability to buy a good. d. willingness to buy a good. 34. Demand curves a. slope upward from left to right. b. slope downward from left to right. c. show a positive relationship. d. slope downward from right to left. 35. Which of the following could increase demand for a good? a. higher birthrate b. increased immigration c. higher prices in the future d. All of the above 36. A shift of the demand curve represents a. a movement on the demand curve. b. a change in the quantity demanded. c. a change in demand. d. All of the above 8 CHAPTER 4, TEST A Assessment Book SAMPLE EMC Publishing

11 37. Who determines whether a good is normal or inferior? a. individuals b. sellers c. government d. All of the above 38. If demand for a good is elastic and its price decreases, total revenue a. goes up. b. goes down. c. remains the same. d. cannot be predicted. Short Essay 39. What will happen in the car market if consumers expect higher prices in the near future? a. The demand for cars will decrease. b. The demand for cars will increase. c. The supply of cars will drop. d. The demand for cars will not change. 40. If the number of buyers in the market increases, which of the following will happen? a. The supply in the market will increase. b. The demand in the market will decrease. c. The demand in the market will increase. d. The supply in the market will decrease. Write answers to essay questions 41 and 42 on the lines provided. 41. Illustrate the law of demand in words, in symbols, and as a graph. Law of Demand EMC Publishing Assessment Book SAMPLE CHAPTER 4, TEST A 9

12 42. Discuss the five factors that cause demand curves to shift and give a specific example of each one. 10 CHAPTER 4, TEST A Assessment Book SAMPLE EMC Publishing

13 Name: Date: CHAPTER 4, TEST B True or False Mark statements 1 26 true or false by writing T or F on the line provided. 1. In the elasticity equation, the numerator is the percentage change in price. 2. When calculating elasticity of demand, if demand is less than 1 it is considered inelastic. 3. In measuring elasticity, if the quantity demanded changes by the same percentage as price it is considered unit-elastic demand. 4. If the quantity demanded changes by the same percentage as price, it is considered inelastic demand. 5. Consumers are price-sensitive to all products; therefore, all products are elastic. 6. If salt prices increase 50 percent and the quantity demanded drops 25 percent, we know that salt is an elastic good. 7. If DVD prices drop by 30 percent and the quantity demanded increases 60 percent, demand is inelastic. 8. There is an inverse relationship between price and quantity demanded, according to the law of demand. 9. According to economists, as a person consumes additional units of a good, satisfaction from each additional unit decreases. 10. Price and quantity demanded move in opposite directions according to the law of demand. 11. Physical fitness centers (gyms) are not using economic thinking when they offer new enrollees two memberships for the price of one. 12. Demand schedules demonstrate that as price decreases, quantity demanded always decreases as well. 13. Individual demand curves and market demand curves are different. 14. If demand shifts to the right, it means that buyers want to buy more of the good at each and every price. 15. Economists refer to damaged goods as inferior goods. 16. Neutral goods are those goods that have gone on sale. 17. Economists, rather than consumers, determine which goods are normal or inferior. EMC Publishing Assessment Book SAMPLE 11

14 18. When the demand for one good moves in the same direction as the price of another good, the two are complements. 19. Price change is shown on a graph by a shift of the curve to the left. 20. Unit-elastic demand exists when the quantity demanded changes by the same percentage as price, and elasticity equals Buyers are less responsive to price changes for goods on which they spend a smaller percentage of their income. 22. The less time you have to respond to a price change in a good, the more likely it is that your demand for the good is going to be inelastic. 23. Because of the relationship between elasticity and total revenue, most sellers would prefer to sell elastic goods. 24. If demand is elastic and the price is decreased, total revenue will increase. 25. If you sell a product for which the demand is inelastic and you reduce the price, your total revenue will decrease. 26. Due to elasticity of demand, a sold-out concert guarantees that total revenue is maximized. Multiple Choice For questions 27 40, write the letter of the best choice on the line provided. 27. The law of demand can be represented a. in picture form as a graph. b. in words. c. as a schedule listing prices and quantities demanded. d. All of the above 28. Market demand represents a. all individual demand curves added together. b. all the producers in the market. c. all buyers and sellers in the market. d. All of the above 29. If the demand for computers increases, the demand curve will a. go up. b. go down. c. shift to the left. d. shift to the right. 30. If the demand curve shifts to the left, it means a. sellers will produce less. b. buyers want to buy less. c. there is less of the product. d. there is more of the product. 31. Which of the following will not change the demand for a product? a. a change in the price of a substitute b. a change in income c. a change in expectations about the future price of the product d. a change in the price of the product 12 CHAPTER 4, TEST B Assessment Book SAMPLE EMC Publishing

15 32. A normal good a. has not been damaged. b. will be purchased, regardless of changes in income. c. will be in higher demand if a person s income increases. d. will be in higher demand if a person s income decreases. 33. When goods are substitutes, which of the following occurs? a. The demand for one good moves in the opposite direction as the price of the other good. b. The demand for one good moves in the same direction as the price of the other good. c. The demand for one good does not affect the price of the other. d. The supply of one good moves in the opposite direction as the price of the other good. 34. If there are few or no substitutes for a good, then which of the following is true? a. The demand would not change. b. The supply would be elastic. c. The demand would be elastic. d. The demand would be inelastic. 35. With complementary goods, which of the following occurs? a. The demand for one good moves in the opposite direction as the price of the other good. b. The demand for one good moves in the same direction as the price of the other good. c. The demand for one good does not affect the price of the other. d. The supply of one good moves in the opposite direction as the price of the other good. 36. A change in quantity demanded can be caused by a. income. b. preferences. c. price. d. price of a substitute. 37. On a demand curve, a change in quantity demanded is represented by a. a shift to the left. b. a shift to the right. c. a movement along the curve. d. All of the above 38. The demand for necessities like milk, electricity, and water is usually a. elastic. b. inelastic. c. unit-elastic. d. None of the above 39. Elasticity of demand measures a. how much buyers respond to a change in income. b. how much sellers respond to a change in price. c. how much buyers respond to a change in price. d. how much sellers respond to a change in income. 40. If a decrease in income increases the demand for a good, the good is a. inferior. b. normal. c. a complement. d. a substitute. EMC Publishing Assessment Book SAMPLE CHAPTER 4, TEST B 13

16 Short Essay Write answers to essay questions 41 and 42 on the lines provided. 41. Explain the difference between demand and quantity demanded, and list the factor or factors that affect each one. 42. Define elasticity of demand and describe how it is calculated; give examples of elastic and inelastic goods. 14 CHAPTER 4, TEST B Assessment Book SAMPLE EMC Publishing

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18 Name: Date: CHAPTER 4, SECTION 1 Demand! Demand and the Law of Demand To be sure you understand demand and the law of demand, fill in the blanks in questions The two conditions of demand are willingness to purchase and. ability to purchase 2. The law of demand says that as the price of a good increases, the quantity demanded of the good. decreases 3. The law of demand says that as the price of a good decreases, the quantity demanded of the good. increases 4. According to the law of demand, price and quantity demanded move in opposite direction(s). Demand Schedules and Demand Curves The law of demand can be represented in numbers using a demand schedule or it can be represented as a graph showing a demand curve. Answer question 5 to illustrate the connection between a demand schedule and a demand curve. 5. Use the demand schedule below to create a demand curve for Simon s consumption of music downloads on the grid shown. Label the curve D 1. DEMAND SCHEDULE FOR SIMON Price (dollars) Quantity demanded (units) $7 1 $6 2 $5 3 $4 4 $3 5 $2 6 $1 7 Price $10 $9 $8 $7 $6 $5 $4 $3 $2 $ Quantity demanded Demand Curve Derived from Demand Schedule 16 Applying the Principles Workbook SAMPLE EMC Publishing

19 Use the graph you created in question 5 to answer questions The demand curve shows that at a price of $7, Simon will buy 1 music download(s), and at a price of $1, he will buy 7 music download(s). 7. Simon s buying behavior demonstrates the law of. demand 8. Simon s change in buying behavior at different prices is a change in. quantity demanded 9. Simon is not willing to pay $7 for every download because his utility (satisfaction) decreases as he downloads more and more music. Economists call this concept the. law of diminishing marginal utility 10. How does the concept in question 9 explain the slope of the demand curve? According to the law of diminishing marginal utility, individuals eventually obtain less utility (satisfaction) from additional units of a good, so it follows that they will buy larger quantities only at lower prices. As a result, the demand curve slopes downward from left to right. All people do not have the same demand for a good. Some people have a greater willingness and ability to purchase a good than other people do. Use the information in question 11 to compare the demand curves of two different people for the same good. 11. Use the demand schedule below to create a demand curve for Carla s consumption of music downloads. Draw the graph on the grid in question 5. Label the curve D 2. DEMAND SCHEDULE FOR CARLA Price (dollars) Quantity demanded (units) $7 4 $6 5 $5 6 $4 7 $3 8 $2 9 $1 10 To answer questions 12 16, use the graph in question 5, which now shows both Simon s and Carla s demand curves. 12. Carla s demand curve (D 2 ) is to the right of Simon s demand curve (D 1 ). 13. For each of the listed prices, Carla is willing and able to buy more music downloads than Simon is willing and able to buy. 14. At each of the possible quantities, Carla is willing and able to pay a higher price than Simon is willing and able to pay. 15. The demand curves you created on the grid in question 5 are individual demand curves. EMC Publishing Applying the Principles Workbook SAMPLE CHAPTER 4, SECTION 1 17

20 16. Suppose Simon and Carla are the only buyers of music downloads. How would you create a market demand curve from the demand curves you drew on the grid in question 5? The market demand curve would be the sum of the two individual demand curves. For example, the market demand curve would contain the point representing a price of $7 and a quantity demanded of 5 units (1 unit from Simon 4 units from Carla). 18 CHAPTER 4, SECTION 1 Applying the Principles Workbook SAMPLE EMC Publishing

21 Name: Date: CHAPTER 4, SECTION 2 The Demand Curve Shifts Changes in Demand and Shifts in Demand Curves When demand changes, the demand curve shifts. Fill in the blanks in questions 1 and 2 with the correct answers. 1. If demand increases, the demand curve shifts, rightward meaning that buyers want to buy more of a good at each and every price. 2. If demand decreases, the demand curve shifts, leftward meaning that buyers want to buy less of a good at each and every price. Factors That Cause Shifts in Demand Curves In questions 3 7, list five factors that cause demand curves to shift. For each factor, describe how the factor affects the demand for a good (whether the factor causes demand to rise or fall). Students may list the factors in any order; the following listing matches the order of presentation in the Student Text. 3. Factor: income Description: As income rises, demand for normal goods rises while demand for inferior goods falls. As income falls, demand for normal goods falls while demand for inferior goods rises. 4. Factor: preferences Description: Increased preference for a good increases demand; decreased preference for a good decreases demand. 5. Factor: prices of related goods Description: If two goods are substitutes and the price of one good rises (falls), the demand for the other good rises (falls). If two goods are complements and the price of one good rises (falls), the demand for the other good falls (rises). EMC Publishing Applying the Principles Workbook SAMPLE 19

22 6. Factor: number of buyers Description: The more buyers in a particular market area, the higher the demand; the fewer buyers, the lower the demand. 7. Factor: future price Description: If buyers expect prices to rise in the future, they will buy now. If buyers expect prices to fall in the future, they will postpone their purchases. Demand Versus Quantity Demanded Demand is not the same as quantity demanded. Answer questions 8 11 on the lines provided. 8. What will cause a change in the demand for a good? Any of the following five factors will change demand: income, preferences, prices of related goods, number of buyers, and future price. 9. What will cause a change in the quantity demanded of a good? Only a change in the price of the good will change quantity demanded. 10. How is a change in demand represented on a graph? A change in demand is shown as a shift in the demand curve. 11. How is a change in quantity demanded represented on a graph? A change in quantity demanded is shown as a movement from one point on the demand curve to another point on the same demand curve. Changes in Demand and in Quantity Demanded In questions 12 17, fill in the blanks to describe how each event will affect the demand for large sport utility vehicles (SUVs). 12. The price of gasoline hits $3 per gallon. Will the demand for large SUVs increase, decrease, or stay the same? decrease 20 CHAPTER 4, SECTION 2 Applying the Principles Workbook SAMPLE EMC Publishing

23 In which direction will the demand curve shift? left Which of the five factors causes the shift? prices of related goods (complement) 13. Smaller, sportier crossover vehicles hit the market and become the latest craze. Will the demand for large SUVs increase, decrease, or stay the same? decrease In which direction will the demand curve shift? left Which of the five factors causes the shift? preferences 14. Rising steel prices cause the prices of SUVs to rise. Will the demand for large SUVs increase, decrease, or stay the same? stay the same In which direction will the demand curve shift? The curve will not shift; there will be a movement along the curve. Which of the five factors causes the shift? None; this is a change in quantity demanded (price change), not a change in demand. 15. Government data show that the incomes of Americans are expected to rise faster than ever over the next year. Will the demand for large SUVs increase, decrease, or stay the same? increase if SUVs are a normal good In which direction will the demand curve shift? right Which of the five factors causes the shift? income 16. Word leaks to consumers that General Motors and Ford plan to offer big rebates on SUVs next month. Will the demand for large SUVs increase, decrease, or stay the same? decrease In which direction will the demand curve shift? left Which of the five factors causes the shift? future price (consumers postpone purchases) EMC Publishing Applying the Principles Workbook SAMPLE CHAPTER 4, SECTION 2 21

24 17. The government loosens immigration laws, allowing millions of immigrants into the country. Will the demand for large SUVs increase, decrease, or stay the same? increase In which direction will the demand curve shift? right Which of the five factors causes the shift? number of buyers The Relationship Between Income and Demand As a result of an increase in wages from his employer, Kramer increased his consumption of Junior Mints and Bosco chocolate-flavored syrup, decreased his consumption of fried chicken, and maintained the same consumption of yogurt. In questions 18 21, identify each of the goods consumed by Kramer as a normal good, an inferior good, or a neutral good. 18. Junior Mints normal good 19. Bosco chocolate-flavored syrup normal good 20. fried chicken inferior good 21. yogurt neutral good In questions 22 25, identify which one of graphs (a), (b), and (c) illustrates the change to Kramer s demand curve for each of the goods. Price Price D1 D2 D2 D1 0 Quantity demanded 0 Quantity demanded (a) (b) 22 CHAPTER 4, SECTION 2 Applying the Principles Workbook SAMPLE EMC Publishing

25 22. Junior Mints (a) 23. Bosco chocolate-flavored syrup (a) 24. fried chicken (b) 25. yogurt (c) Price D 0 Quantity demanded (c) EMC Publishing Applying the Principles Workbook SAMPLE CHAPTER 4, SECTION 2 23

26 Name: Date: CHAPTER 4, SECTION 3 Elasticity of Demand Elasticity Versus Inelasticity According to the law of demand, when price rises, quantity demanded falls and when price falls, quantity demanded rises. Elasticity of demand is a measure of how much the quantity demanded of a good rises or falls due to a change in the price of the good. You can think of elastic demand as being like an elastic band the quantity demanded of the good will stretch freely when pulled by a change in the good s price. Inelastic demand is more like a rope the quantity demanded of the good will not stretch easily when pulled by a change in the good s price. In questions 1 and 2, circle the letter of the correct answer. 1. If the price of a good with elastic demand increases, which of the following describes the effect on the quantity demanded of the good? d a. increases a little b. increases a lot c. decreases a little d. decreases a lot 2. If the price of a good with inelastic demand increases, which of the following describes the effect on the quantity demanded of the good? c a. increases a little b. increases a lot c. decreases a little d. decreases a lot Factors That Determine Elasticity of Demand In questions 3 6, list the four factors that determine the elasticity of demand. For each factor, describe how the factor affects the elasticity of demand for a good (that is, explain whether it causes demand to be more elastic or more inelastic). Students may list the factors in any order; the following listing matches the order of presentation in the Student Text. 3. Factor: number of substitutes Description: More available substitutes tend to make demand for a good elastic; fewer available substitutes tend to make demand for a good inelastic. 4. Factor: luxuries versus necessities 24 Applying the Principles Workbook SAMPLE EMC Publishing

27 Description: The demand for luxuries tends to be elastic; the demand for necessities tends to be inelastic. 5. Factor: percentage of income spent on the good Description: The demand for goods that take a large percentage of income tends to be elastic; the demand for goods that take a relatively small percentage of income tends to be inelastic. 6. Factor: time Description: The less time you have to respond to a price change in a good, the more likely it is that your demand for that good is going to be inelastic. Considering the factors you listed in questions 3 6, identify the demand for the goods in questions 7 9 as elastic, inelastic, or unit-elastic. Explain the reason for each choice. 7. T-bone steak Demand for a T-bone steak would most likely be elastic because there are available substitutes, it is a luxury good, and it takes a relatively large portion of income. 8. new sport utility vehicle Demand for a new SUV would most likely be elastic because there are available substitutes, it is a luxury good, and it takes a relatively large portion of income. 9. insulin Demand for insulin would be inelastic because there are no substitutes and it is an absolute necessity for a diabetic regardless of the percentage of income spent. In each of the cases described in questions 10 12, identify whether the demand for the good is elastic, inelastic, or unit-elastic. Write your answers on the lines provided. 10. elastic The price of corn rises 5 percent, and the quantity demanded falls 15 percent. 11. unit-elastic The price of bagels rises 8 percent, and the quantity demanded falls 8 percent. 12. inelastic The price of telephones rises 10 percent, and the quantity demanded falls 2 percent. EMC Publishing Applying the Principles Workbook SAMPLE CHAPTER 4, SECTION 3 25

28 Elasticity and Total Revenue Elasticity of demand matters to sellers of goods because it relates to their total revenue (Price Quantity sold Total revenue). Questions relate to how the elasticity of demand for a good affects a seller s total revenue when the seller changes the price of the good. Fill in each blank with the correct answer. 13. If demand for a good is elastic and price increases, then total revenue will. decrease 14. If demand for a good is elastic and price decreases, then total revenue will. increase 15. If demand for a good is inelastic and price increases, then total revenue will. increase 16. If demand for a good is inelastic and price decreases, then total revenue will. decrease 17. If demand for a good is unit-elastic and price increases, then total revenue will. stay the same 18. If demand for a good is unit-elastic and price decreases, then total revenue will. stay the same 19. If a seller would like to increase revenue, the seller should (a) increase the price of the good if the demand for the good is inelastic or (b) decrease the price of the good if the demand for the good is. elastic In each of questions 20 22, complete the table to calculate the total revenue for the good. Then fill in the blanks in the question following the table to summarize the results in each case. 20. When Edith increased the price of a good from $2 to $3, the quantity demanded rose from 100 to 110. Price Quantity sold Total revenue Original $ $ 200 New $ $ 330 So, because revenue rose when the price, rose demand for the good must be. inelastic 21. When Renaldo increased the price from $10 to $12, the quantity demanded fell from 80 to 40. Price Quantity sold Total revenue Original $ $ 800 New $ $ 480 So, because revenue fell when the price, rose demand for the good must be. elastic 26 CHAPTER 4, SECTION 3 Applying the Principles Workbook SAMPLE EMC Publishing

29 22. When Keiko decreased the price from $150 to $125, the quantity demanded rose from 60 to 120. Price Quantity sold Total revenue Original $ $ 9,000 New $ $ 15,000 So, because revenue rose when the price, fell demand for the good must be. elastic Elasticity of Demand and a Cigarette User Fee To increase state revenue and decrease smoking rates, the governor of Minnesota proposed that the state impose a $0.75 per pack cigarette user fee. His proposal was passed by the state legislature. Use this information and your knowledge about elasticity of demand to answer questions Did the governor of Minnesota assume that demand for cigarettes was elastic or inelastic when he made his proposal? Explain your answer. The governor assumed that demand for cigarettes was elastic because one of his goals was to decrease smoking rates. If you raise the price of a good with elastic demand, the quantity demanded will go down. 24. Given the large increase in price, in which income groups and age groups would you expect to see the greatest decrease in quantity demanded? People with smaller incomes likely will be affected because the relative percentage of their income spent on cigarettes will be greater. Also people who smoke occasionally but are not addicted to nicotine likely will be affected because they may view cigarettes as a luxury instead of a necessity. 25. Which of the four factors that determine elasticity of demand do you think plays the largest role in people s demand for cigarettes? The factor of whether a good is a luxury or a necessity would probably play the largest role. For people who are addicted to nicotine, cigarettes are a necessity. 26. How might time affect this scenario? It takes time to quit smoking, so as time goes on, some users may stop smoking because of the increase in price. EMC Publishing Applying the Principles Workbook SAMPLE CHAPTER 4, SECTION 3 27

30 Elasticity of Demand and Gas Prices Many people once believed that an increase in the price of gasoline would change consumer attitudes and driving behavior. For instance, economists assumed that people would drive less often and buy smaller, more efficient cars as the price of gasoline increased. However, gas prices increased in 2005, and while the sales of sport utility vehicles suffered, people s driving habits and gas consumption levels changed very little. Use this information and your knowledge about elasticity of demand to answer questions Is the demand for gasoline more elastic or more inelastic than previously thought? Explain your answer. The demand for gasoline seems to be more inelastic than previously thought. If you raise the price of an inelastic good, the quantity demanded will decrease only a little. 28. Which of the four factors that determine elasticity of demand do you think plays the largest role in people s buying habits for gasoline? Both the number of substitutes and whether a good is a luxury or a necessity likely play roles in people s demand for gasoline. In the short run, people may believe that few substitutes exist for driving. And many people apparently see the use of their cars as a necessity, not a luxury. 29. How might time affect this scenario? If gasoline prices do not drop, people may buy more fuel-efficient vehicles when they need new cars and they may change their lifestyles or even relocate to decrease their consumption of gasoline. 28 CHAPTER 4, SECTION 3 Applying the Principles Workbook SAMPLE EMC Publishing

31 Elasticity of Demand in Graphs In questions 30 and 31, use your understanding of elasticity of demand to decide whether the graph shows a good with elastic demand or a good with inelastic demand. 30. inelastic 31. elastic Price Price D D 0 Quantity demanded 0 Quantity demanded EMC Publishing Applying the Principles Workbook SAMPLE CHAPTER 4, SECTION 3 29

32 Name: Date: CHAPTER 4 We Demand Practice! In each of questions 1 14, an event has occurred that will affect the demand or quantity demanded for a good. Illustrate the change in demand or quantity demanded for the good that is listed below the graph. To illustrate a change in demand (also called a shift of the demand curve), draw a parallel line to the right or left of the original line plus an arrow to indicate direction of the shift. To illustrate a change in the quantity demanded (also called a movement along the demand curve), indicate two points on the demand curve and draw an arrow pointing up or down the curve between the two points. 1. Harry Potter movies increase interest in the books. 2. Gas prices have risen to new high levels. Price Price 0 Quantity demanded Harry Potter Books D 0 Quantity demanded Motor Scooters with High Miles per Gallon D 30 Applying the Principles Workbook SAMPLE EMC Publishing

33 3. The price of beef is expected to rise next week. 4. The price of beef rises. Price Price D D 0 Quantity demanded T-bone Steak 0 Quantity demanded Hamburger Buns 5. The first snowstorm of the season occurs. 6. Summer vacation begins! Price Price D D 0 Quantity demanded Snow Shovels 0 Quantity demanded Sunscreen EMC Publishing Applying the Principles Workbook SAMPLE CHAPTER 4 31

34 7. A tax rebate increases incomes. 8. The price of pork rises. Price Price D D 0 Quantity demanded New Cars 0 Quantity demanded T-bone Steak 9. The price of DVD players decreases. 10. The price of DVD players decreases. Price Price D D 0 Quantity demanded VCRs 0 Quantity demanded DVDs 32 CHAPTER 4 Applying the Principles Workbook SAMPLE EMC Publishing

35 11. The price of breakfast cereal rises. 12. The price of orange juice rises. Price Price D D 0 Quantity demanded Milk 0 Quantity demanded Orange Juice 13. The price of orange juice rises. 14. Tiger Woods creates a new fad: golf. Price Price D D 0 Quantity demanded Apple Juice 0 Quantity demanded Golf Balls EMC Publishing Applying the Principles Workbook SAMPLE CHAPTER 4 33

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38 Name: Date: CHAPTER 4, SECTION 1 Outlining Activity Look through the chapter for an overview of the material. Pay attention to the main topics in the book. As you scan each section of the book, fill in the missing words in the following outline. I. What Is Demand? A. Markets are where people come together to buy and sell goods or services. 1. Demand is the buying side of a market. 2. Supply is the selling side of a market. B. Demand refers to the willingness and ability of buyers to purchase a good or service. II. What Does the Law of Demand Say? A. The law of demand says that as the price of a good, increases quantity demanded of the good, decreases and as price of a good decreases, quantity demanded of the good increases. B. Quantity demanded refers to the number of units of a good purchased at a specific price. III. Why Do Price and Quantity Demanded Move in Opposite Directions? A. Price and quantity demanded move in opposite directions because of the law of diminishing marginal utility. B. The law of diminishing marginal utility states that as a person consumes additional units of a good, the utility gained from each additional unit of the good. decreases IV. The Law of Demand in Numbers and Pictures A. A demand schedule is a numerical chart showing the law of demand. B. A demand curve is a(n) graphical representation of the law of demand. V. Individual Demand Curves and Market Demand Curves A. A(n) individual demand curve represents an individual s demand. B. A(n) market demand curve is the sum of all individual demand curves added together. 36 Guided Reading and Study Guide SAMPLE EMC Publishing

39 Name: Date: CHAPTER 4, SECTION 1 Just the Facts Handout What Is Demand? A market is a place where people buy and sell things. A market has two sides. There is a buying side and a selling side. The buying side of a market is called demand. The selling side is called supply. Demand is the willingness and ability of buyers to purchase different amounts of something at different prices, during a specific time period. Willingness to buy means a person has a desire for a product. Ability means a person has the money to pay for it. Without both willingness and ability, there is no demand. Both must be present for there to be demand. What Does the Law of Demand Say? The law of demand says that when the price of a product goes up, the quantity demanded goes down. This law also says the opposite. It says that when the price goes down, the quantity demanded goes up. Quantity demanded refers to the number of units of a good that are purchased at a specific price. Notice that the terms demand and quantity demanded sound alike. They are, however, different. You will learn more about this later. Why Do Price and Quantity Demanded Move in Opposite Directions? The law of diminishing marginal utility says that as a person uses more of a product, the person gets less satisfaction from it. For example, you get less satisfaction from the second hamburger you eat than from the first. You get less satisfaction from the third than from the second. And so on. The law of diminishing marginal utility affects the law of demand. The more satisfaction you receive from something, the more you will pay. The less satisfaction you receive, the less you will pay. This means that you will buy more of something only if it costs less. This is the law of demand. The Law of Demand in Numbers and Pictures We can show the law of demand with both numbers and pictures. A demand schedule shows the law of demand with numbers. A demand curve shows the law of demand in picture form (graphically). See Exhibit 4-1 on page 93 of your textbook. Individual Demand Curves and Market Demand Curves An individual demand curve shows one person s demand for a good. A market demand curve shows the sum of all the individual curves for the good. See Exhibit 4-2 on page 94 of your text. Answer questions 1 4 in the Section 1 Assessment on page 94 of your textbook. EMC Publishing Guided Reading and Study Guide SAMPLE EMC Publishing 37

40 Name: Date: CHAPTER 4, SECTION 2 Outlining Activity Look through the chapter for an overview of the material. Pay attention to the main topics in the book. As you scan each section of the book, fill in the missing words in the following outline. I. When Demand Changes, the Curve Shifts A. A rightward shift means that demand has. increased B. A leftward shift means that demand has. decreased II. What Factors Cause Demand Curves to Shift? A. Income 1. A good for which demand rises as income rises and falls as income falls is a(n). normal good 2. A good for which demand falls as income rises and rises as income falls is a(n) inferior good. 3. If a person buys the same amount of a good when income changes, the good is a neutral good. B. Preferences 1. People s preferences affect how much of a good they buy. C. Prices of Related Goods 1. With, substitutes the demand for one good moves in the same direction as the price of the other good. 2. With, complements the demand for one good moves in the opposite direction as the price of the other. D. Number of Buyers E. Future Price 1. Buyers who expect the price of a good to be higher in the future may buy the good now. In this case, current demand for the good. increases 2. Buyers who expect the price of a good to be lower in the future may wait and buy the good later. In this case, current demand for the good falls. 38 Guided Reading and Study Guide SAMPLE EMC Publishing

41 III. What Factor Causes a Change in Quantity Demanded? A. A change in quantity demanded refers to a movement along a demand curve. B. Only the price of the good can directly cause a change in the. quantity demanded EMC Publishing Guided Reading and Study Guide SAMPLE CHAPTER 4, SECTION 2 39

42 Name: Date: CHAPTER 4, SECTION 2 Just the Facts Handout When Demand Changes, the Curve Shifts Demand can change. It can go up, or it can go down. When demand changes, the demand curve moves. It can move either left or right. When demand increases, the curve moves to the right. When demand decreases, the curve moves to the left. See Exhibit 4-3 on page 95 of your textbook. What Factors Cause Demand Curves to Shift? Several things can cause demand to change. These factors include income; buyer preferences; prices of related goods; number of buyers; and future price. Income When a person s income changes, his or her demand for goods can change. The changes in demand depend on the goods involved. Economists talk about three kinds of goods when they talk about income and demand: normal goods inferior goods neutral goods If income and demand move in the same direction, the good is a normal good. For example, if your income rises and you buy more of a good, the good is a normal good. If your income falls and you buy less, the good is also a normal good. If income and demand move in opposite directions, the good is an inferior good. If your income goes up and you buy less of a good, it is an inferior good. If your income goes down and you buy more, the good is also an inferior good. If income changes but the demand does not change, the good is a neutral good. Preferences People s preferences (what they like most) affect demand. If more people start to like something, demand goes up for that item. If demand goes up, the demand curve moves to the right. If people stop liking something, the demand goes down and the curve shifts to the left. Prices of Related Goods Demand is affected by the prices of related goods. There are two types of related goods. These are substitutes and complements. Substitutes are similar goods. One can take the place of the other. Peanuts can substitute for pretzels, for example. The price of one good and the demand for the other move in the same direction. For example, if the price of pretzels goes up, the 40 Guided Reading and Study Guide SAMPLE EMC Publishing

43 demand for peanuts goes up. Complements are two goods that are used together. Tennis rackets and tennis balls are complements. The demand for one good and the price of the other move in opposite directions. If the price of tennis rackets goes up, the demand for tennis balls goes down. Number of Buyers The more buyers for a good, the higher the demand. The fewer buyers, the lower the demand. Future Price Buyers may expect the price of a good to be higher in the future. If so, they may buy now. This increases the current demand. The opposite can also happen. Buyers might think the price will be lower in the future. In this case, they may wait to buy. This decreases the current demand. What Factor Causes a Change in Quantity Demanded? Only one factor can change quantity demanded. This factor is price. The change is shown as movement along a demand curve. See Exhibit 4-49(b) on page 99 of your text. Answer questions 1 3 in the Section 2 Assessment on page 99 of your textbook. EMC Publishing Guided Reading and Study Guide SAMPLE CHAPTER 4, SECTION 2 41

44 Name: Date: CHAPTER 4, SECTION 3 Outlining Activity Look through the chapter for an overview of the material. Pay attention to the main topics in the book. As you scan each section of the book, fill in the missing words in the following outline. I. What Is Elasticity of Demand? A. Elasticity of demand deals with the relationship between price and quantity demanded. B. Elasticity of demand compares the percentage change in quantity demanded with the percentage change in. price C. Elasticity of demand is seen as the following ratio: Elasticity of demand = Percentage change in quantity demanded Percentage change in price D. Elastic demand exists when the quantity demanded (the numerator) changes by a greater percentage than the percentage change in price (the denominator). E. Inelastic demand exists when the quantity demanded (the numerator) changes by a smaller percentage than the percentage change in price (the denominator). F. Unit-elastic demand exists when the quantity demanded (the numerator) changes by the same percentage as the percentage change in price (the denominator). II. What Determines Elasticity of Demand? A. Number of Substitutes B. Luxuries Versus Necessities C. Percentage of Income Spent on the Good D. Time III. An Important Relationship Between Elasticity and Total Revenue A. Case 1: Elastic demand and a price increase cause total revenue to. decrease B. Case 2: Elastic demand and a price decrease cause total revenue to. increase C. Case 3: Inelastic demand and a price increase cause total revenue to. increase D. Case 4: Inelastic demand and a price decrease cause total revenue to. decrease 42 Guided Reading and Study Guide SAMPLE EMC Publishing

45 Name: Date: CHAPTER 4, SECTION 3 Just the Facts Handout What Is Elasticity of Demand? Elasticity of demand deals with the relationship between price and quantity demanded. It measures the impact of a price change. A small price change can cause a big change in how many of a certain product people buy. Or a small price change can cause little change in the number of units of a good that people buy. How do economists measure the relationship between price and quantity demanded? They compare the percentage change in price with the percentage change in quantity demanded. They do this by dividing the percentage change in quantity demanded by the percentage change in price. This comparison produces three types of results: When the change in quantity demanded is greater than the change in price, the result is elastic demand. When the change in quantity demanded is less than the change in price, the result is inelastic demand. When the change in quantity demanded is the same as the change in price, the result is unit-elastic demand. What Determines Elasticity of Demand? Four factors affect elasticity of demand: number of substitutes whether the good is a luxury or a necessity percentage of income spent on the good time Number of Substitutes Some goods have few substitutes. Other goods have many. Heart medicine is an example of a good with few substitutes. A soft drink is an example of a good with many substitutes. If a good has few substitutes, the demand will probably be inelastic. If a good has many substitutes, the demand will probably be elastic. Luxuries Versus Necessities Necessary goods are goods that people feel they need to survive. Food is a necessary good. Even if the price increases, people will not be able to cut back on these goods. The demand for necessities tends to be inelastic. Luxuries are goods that people do not need to survive. Very expensive cars are luxuries. If the price increases, people will cut back on their purchases of these items. The demand for luxuries tends to be elastic. Percentage of Income Spent on the Good Buyers react more to price changes on goods for which they spend a lot of their income. The demand for these goods tends to be elastic. On the other hand, buyers don t react much to price changes if they spend a small amount of their income on a good. The demand for such a good tends to be inelastic. EMC Publishing Guided Reading and Study Guide SAMPLE 43

46 Time More time means more chances to change how much people buy after a price change. With more time, they can find substitutes. They can change their lifestyle. This means their demand is more elastic with more time. With little time to react, people tend not to change the amount they buy after a price change. They do not have time to react, so their demand tends not to change. This means the demand is inelastic. An Important Relationship Between Elasticity and Total Revenue Whether demand for a good is elastic or inelastic matters to sellers of goods. It affects their total revenue. Four different results can occur when prices rise or fall: If demand is elastic, an increase in price causes a decline in total revenue. If demand is elastic, a decrease in price causes an increase in total revenue. If demand is inelastic, an increase in price causes an increase in total revenue. If demand is inelastic, a decrease in price causes a decrease in total revenue. Answer questions 1 4 of the Section 3 Assessment on page 107 of your textbook. 44 CHAPTER 4, SECTION 3 Guided Reading and Study Guide SAMPLE EMC Publishing

47 Name: Date: CHAPTER 4 Graphic Organizer Activity Supply the missing words in the blank spaces of this graphic organizer. DEMAND (Chapter 4) PRICE (Chapter 6) SUPPLY (Chapter 5) Price and quantity demanded move in opposite directions. Law of Demand The graphical representation of demand is called a(n). demand curve The factors that cause a shift in demand are, income, preferences prices of Factors That Shift Demand related goods, number of buyers, and future price. A change in price causes a change in the quantity demanded of the good. Demand may be, elastic, inelastic or unit-elastic. Elasticity of Demand Determinants of demand elasticity include the number of, substitutes whether goods are luxuries versus necessities, the percentage of income spent on a good, and. time An important relationship exists between elasticity and total. revenue EMC Publishing Guided Reading and Study Guide SAMPLE 45

48 Name: Date: CHAPTER 4 Vocabulary Activity For each question, fill in the blank with the correct term from the following list. market demand law of demand quantity demanded law of diminishing marginal utility demand schedule demand curve normal good inferior good neutral good substitutes complements elasticity of demand elastic demand inelastic demand unit-elastic demand 1. A place where people come together to buy and sell goods or services is called a. market 2. The law of diminishing marginal utility states that as a person consumes additional units of a good, eventually the utility gained from each additional unit of the good decreases. 3. When demand is, inelastic demand the percentage change in quantity demanded is less than the percentage change in price. 4. In economics we call demand the willingness and ability of buyers to purchase a good or service. 5. Goods consumed jointly are ; complements this means that the price of one good and the demand for the other good move in opposite directions. 6. The relationship between the percentage change in quantity demanded and the percentage change in price is known as. elasticity of demand 7. The law of demand states that as the price of a good increases, the quantity demanded of the good decreases, and as the price of a good decreases, the quantity demanded of the good increases. 8. A good for which demand rises as income rises and falls as income falls is referred to as a(n). normal good 9. When demand is, elastic demand the percentage change in quantity demanded is greater than the percentage change in price. 10. A(n) inferior good is a good for which demand falls as income rises and rises as income falls. 46 Guided Reading and Study Guide SAMPLE EMC Publishing

49 11. A good for which demand remains unchanged as income rises or falls is called a(n). neutral good 12. Two goods are substitutes if the price of one good and the demand for the other move in the same direction. 13. Unit-elastic demand exists when the percentage change in quantity demanded is the same as the percentage change in price. EMC Publishing Guided Reading and Study Guide SAMPLE CHAPTER 4 47

50 Name: Date: CHAPTER 4 Working with Graphs and Tables Activity The exhibit below shows a demand curve for tickets to Lindsay Lohan concerts. Each of the following occurrences causes a shift in the demand curve. For each occurrence, draw a new demand curve that shows how the demand curve shifts. Label each demand curve with the appropriate number. The first one (labeled D 1 ) is completed for you. Price D 0 D 1 1. Concert promoters begin a huge advertising pitch for the concerts. 2. Lindsay Lohan releases a new hit song. Q 4 Q 3 Q 0 Q 1 Q 2 Quantity of tickets demanded 3. The incomes of concert fans decrease (assume concerts are normal goods). 4. Shakira (a substitute for Lindsay Lohan) hits the road with a concert tour. 48 Guided Reading and Study Guide SAMPLE EMC Publishing

51 Name: Date: CHAPTER 4 Practice Test True or False For each of these statements, place a T in the blank if the statement is true or an F if the statement is false. 1. T Suppose that the demand for football tickets at your school is elastic. If your school lowers the price of tickets, then total revenue from ticket sales will increase. 2. F The price of CDs increases 10 percent and the quantity demanded of CDs falls 5 percent. The demand for CDs is elastic. 3. T According to the law of demand, as the price of a good increases, the quantity demanded of the good decreases. 4. F Peanut butter and jelly are complement goods. If the price of jelly increases, then the demand for peanut butter increases. 5. F The law of diminishing marginal utility states that as a person consumes additional units of a good, eventually the utility gained from each additional unit of the good increases. 6. F If the percentage change in price is 10 percent and the percentage change in quantity demanded is 5 percent, then the elasticity of demand is equal to F If the price of concert tickets increases, the demand for concert tickets will decrease. 8. T A demand curve graphically shows the law of demand. 9. T If Joe s demand for hotdogs falls as his income rises, then hotdogs are an inferior good. 10. T A good will tend to have a more elastic demand if it has many substitutes. 11. T A person who has a long period of time to adjust to price increases in housing will likely have an elastic demand for housing. Short Answer Write your answers on the lines provided. 1. Suppose that the number of students in your high school decreases by a large amount next year. What will likely happen to the demand for sodas at your school vending machines? A decrease in the number of buyers will probably decrease the demand for sodas. EMC Publishing Guided Reading and Study Guide SAMPLE 49

52 2. The basketball team at your school is having an especially good season. Are there more or fewer people at their basketball games this year? Explain your answer, using the concept of demand. A successful team should positively change preferences for watching games. Therefore, demand for seeing the games should increase the demand curve should shift to the right. 3. Explain the difference between a change in demand and a change in quantity demanded. A change in demand refers to a shift in the demand curve. A change in quantity demanded refers to a movement along a demand curve. 4. Shirley has a job at Burger Delight. Her boss recently increased the price of burgers. The boss tells Shirley that after the price increase, revenues at Burger Delight went down. If you were Shirley, how would you explain this to the boss? In your answer, use the concepts of demand and elasticity. Assuming that only the price of burgers changed, then demand for the burgers must be elastic. A price increase causes quantity demanded to go down by a greater amount, so that total revenues decrease. 50 CHAPTER 4 Guided Reading and Study Guide SAMPLE EMC Publishing

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54 Name: Date: CHAPTER 4 Before you read the following scene, review Chapter 4 in the Student Text, focusing on the major concepts covered there. You may want to skim the chapter or read the Chapter Summary on page 108. Now, with the economics concepts of Chapter 4 fresh in your mind, read Moving to Atlanta, searching, like an economics detective, for the economics below the surface. The story contains a number of economics ideas, but they are hidden. It is your job to find them. As you read, circle and underline words and phrases that you think are clues or connections to the economics embedded in the scene. Make notes in the margin. At the end of the scene, on the lines provided, write two or three sentences describing each of the three most interesting economics ideas that you found in the scene. Moving to Atlanta Notes Dana moved into the blue house on the corner of Peachtree Lane one month ago, in early August. Her father had lost his job in Seattle, and found a new one in Atlanta. When he told Dana that the family had to move, she was understandably upset. What high school student wants to pick up and travel across the country for her senior year? Can t I just stay here for a year? she asked her parents. I m sure Robin s mom will let me live with them, she added. Robin had been Dana s best friend since the third grade. I know it s hard on you, Dana s mother said. But you ll adjust. It may be a little hard in the beginning, but things will get better with time. After all, don t you want to stay with the family? Well, of course I want to stay with the family, Dana thought. It s just that the family doesn t seem to want to stay where I want to stay. Don t Mom and Dad know that abrupt and drastic changes like this could deeply and adversely affect me? I can see myself years from now sitting in some psychiatrist s office, trying to figure out why I turned out to have so many problems. Well, doctor, I ll say, I think it all started when my parents dragged me across the country at the tender age of seventeen. Nevertheless, Dana had said good-bye to her friends, gotten into the black Honda Pilot with her mother, father, and younger brother (who didn t want to move either), and started the journey from Seattle to Atlanta, a total of 2,181 miles. The house had been packed up three days before. All the family s furniture, clothes, computers, dishes, pots and pans, and just about everything else was on a huge truck being driven by two strong strangers from a moving company. Dana knew Seattle; it had been her home for her entire life. She knew next to nothing about Atlanta, and she was a little nervous about the move. After her parents had returned from a visit to find a house there, she asked her mother what the city was like. What Dana meant was, What will my new life there be like? Will the kids my age accept me? Will I get along with them, and will we have things in common? But Dana hadn t asked these questions, 52 Finding Economics SAMPLE EMC Publishing

55 mainly because she wasn t sure why she was feeling uneasy about going to this new place. She discovered the reason on her very first day of school in Atlanta. That day, her unsettled feeling skyrocketed. At 8:35 a.m., Dana s slight unease has turned to panic, said the on-the-scene reporter in her head. That queasy feeling in her stomach has just reached a 10 on the Richter scale, and if she opens her mouth to talk, she is not sure that the words will come out correctly, in the right order. She walked to the school administration office and told the woman at the counter that her name was Dana Petty and that she was supposed to start school today. Oh, yes, the assistant said. You re from Seattle, aren t you? Yes, I am, Dana said. Well, welcome, the assistant added. We re always happy to have one more good student at our school. Dana smiled and wondered how the assistant knew she was a good student. Maybe she doesn t know, Dana decided; maybe she just says that because it is a positive thing to say. Or maybe she says it because she thinks I m a bad student, and she wants me to try to be a good student. Then Dana realized she was doing it again: she was overanalyzing things because she was nervous. She had always done that. Later that day, in her biology lab, she made her first new friend. His name was Andrew. The only empty seat in biology lab was the seat next to Andrew, so that is where the biology teacher asked Dana to sit. Andrew said a quick hi when Dana sat down next to him. Dana smiled and said hi back. Then Dana looked at the teacher. She didn t want to get reprimanded for talking in class her first day. As soon as class was over, Andrew turned to Dana. My name is Andrew, he said. I m Dana, Dana said. Where are you from? Andrew asked. Seattle, Dana said. Then she added, A long way from here, I m afraid to say. Dana and Andrew began to collect their books and notebooks. We have lunch now, Andrew said. Would you like me to show you around the school? Maybe we can eat lunch together first. Dana smiled with relief. She didn t want to eat lunch alone. That would just be too hard. Sure, that would be great, Dana said. She followed Andrew out of the biology lab and to the lunchroom. They sat and talked and ate. Afterward, Andrew, true to his promise, showed Dana around the school. She was amazed at how many people the football stands could hold. Football is big around here, Andrew said. I can see that, Dana said. It didn t take long for Andrew to ask Dana if she wanted to go to the football game on Friday night. She said that she would like that. Friday night, during the game and afterward, everything went smoothly. Dana liked Andrew, and the two talked about going out again soon. So Dana was ready when the phone rang the next afternoon. Hi, Andrew said. Would you like to go to a movie tonight? Oh, I can t, said Dana. My parents are going to meet some people in my dad s new workplace, and I have to watch my brother. Okay, said Andrew. There was an uncomfortable pause. Then, Well, I guess I ll see you in school next week Notes EMC Publishing Finding Economics SAMPLE CHAPTER 4 53

56 We could go to the movie tomorrow, Dana interrupted. Why did I say that? she asked herself as she tried to focus on Andrew s response. It makes me sound desperate, and I don t want to sound desperate but really, I am! After all, Andrew is the only person I know in all of Atlanta. Somehow, through all this inner dialogue, Dana heard Andrew say that tomorrow wouldn t work for him, and she managed to tell him that was okay and to hang up with some dignity. Then she felt sad and lonely. What if that was it, and Andrew didn t want to see her again? Whom would she eat lunch with? If that had been a call from a guy in one of my classes back in Seattle, I wouldn t have felt this way, she thought. I m sure I would have just assumed that I would see him on Monday, and we would find another time to go out. Or at least I wouldn t have felt sad and lonely about the idea that we might not get together again. Why do I feel so differently here in Atlanta? Notes As time passed, Dana made more friends in Atlanta. It has now been five months since Dana moved to town. She still talks to her friends back in Seattle, but less and less frequently. Two of her best friends are Soo Jin and Liz, classmates at her not-so-new school. Dana doesn t date Andrew anymore, although she did go out with him several times after the football game. Dana noticed that the more friends she got, the more Andrew wanted to go out with her. It was as if he had to know that Dana had options before he would pursue a relationship with her. Eventually, though, they both realized that they didn t have much in common, and they began to see other people. I have a hard time understanding guys sometimes, she often says to Soo Jin and Liz. Soo Jin and Liz agree that it s not always easy. Find the Economics Name the three most interesting economics ideas that you found hidden in this scene, and explain the clues that led you to discover them CHAPTER 4 Finding Economics SAMPLE EMC Publishing

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58 LESSON PLAN Name: Class: Date: M T W TH F CHAPTER 4, SECTION 1 Understanding Demand Pacing: 2 days Objectives: After completing this lesson, students will be able to explain the law of demand; describe the difference between demand and quantity demanded; provide examples of the law of diminishing marginal utility; and create demand curves from given demand schedules. Read Instruct students to read SE pages Focus and Motivate Do the Economics Around the Clock Kickoff Activity and the Activating Prior Knowledge exercise, ATE, page 90. Teach Introduce and explain the key concepts of the lesson. Use Transparencies 4-1 to 4-3, DLON. Discuss Economics in the Real World, Are the Prices at Disneyland Goofy? SE, page 92. Assign Assign Demand! APW, pages Assess Administer one or more of the following assessment tools: Section 1 Assessment, SE, page 94 Quick Quiz, ATE, page 93 Section 1 Quiz, AB Reteach/Review As needed, assign the following materials for students requiring further work on the concepts in this lesson: Section 1 Outlining Activity, GRSG Section 1 Just the Facts Handout, GRSG Enrich/Extend Choose from the following features for extension and enrichment: Your Personal Economics, Too Good to Be True? SE, pages Thinking Like an Economist, ATE, page 91 AB = Assessment Book: Tests and Quizzes with Answer Key APW = Applying the Principles Workbook ATE = Annotated Teacher s Edition DLON = Daily Lectures: Overheads and Notes GRSG = Guided Reading and Study Guide SE = Student Edition 56 Lesson Plans SAMPLE EMC Publishing

59 Optional Economic Principles Lectures, Videocassette or DVD Encore CD Finding Economics Internet Resource Center Current Events Lectures/Lessons Practice Tests Study Guide Marketplace Audio Lesson CD Spanish Audio Summaries CD Test Generator CD AB = Assessment Book: Tests and Quizzes with Answer Key APW = Applying the Principles Workbook ATE = Annotated Teacher s Edition DLON = Daily Lectures: Overheads and Notes GRSG = Guided Reading and Study Guide SE = Student Edition EMC Publishing Lesson Plans SAMPLE CHAPTER 4, SECTION 1 57

60 LESSON PLAN Name: Class: Date: M T W TH F CHAPTER 4, SECTION 2 The Demand Curve Shifts Pacing: 2 days Objectives: After completing this lesson, students will be able to explain why a demand curve shifts to the right or the left; distinguish between normal, inferior, and neutral goods; list the factors that cause a change in demand; and identify the factor that causes a change in quantity demanded. Read Instruct students to read SE pages Focus and Motivate Do the Kickoff Activity, ATE, page 95. Teach Use Transparency 4-4, DLON, to explain how and why a demand curve shifts. Use the Reinforcement Activity, the Discussion Starter, and the Prediction Activity, ATE, pages 96 and 97, to prompt discussion of the factors that cause demand curves to shift. Assign Assign The Demand Curve Shifts, APW, pages Assess Administer one or more of the following assessment tools: Section 2 Assessment, SE, page 99 Quick Quiz, ATE, page 98 Section 2 Quiz, AB Reteach/Review As needed, assign the following materials for students requiring further work on the concepts in this lesson: Reteaching Activity, ATE, page 99 Section 2 Outlining Activity, GRSG Section 2 Just the Facts Handout, GRSG Enrich/Extend Choose from the following features for extension and enrichment: Economics in the Real World, New Coke, Classic Coke, or Pepsi? SE, page 98 Thinking Like an Economist, ATE, page 96 Cooperative Learning, ATE, page 96 AB = Assessment Book: Tests and Quizzes with Answer Key APW = Applying the Principles Workbook ATE = Annotated Teacher s Edition DLON = Daily Lectures: Overheads and Notes GRSG = Guided Reading and Study Guide SE = Student Edition 58 Lesson Plans SAMPLE EMC Publishing

61 Optional Economic Principles Lectures, Videocassette or DVD Encore CD Finding Economics Internet Resource Center Current Events Lectures/Lessons Practice Tests Study Guide Marketplace Audio Lesson CD Spanish Audio Summaries CD Test Generator CD AB = Assessment Book: Tests and Quizzes with Answer Key APW = Applying the Principles Workbook ATE = Annotated Teacher s Edition DLON = Daily Lectures: Overheads and Notes GRSG = Guided Reading and Study Guide SE = Student Edition EMC Publishing Lesson Plans SAMPLE CHAPTER 4, SECTION 2 59

62 LESSON PLAN Name: Class: Date: M T W TH F CHAPTER 4, SECTION 3 Elastici ty of Demand Pacing: 2 days Objectives: After completing this lesson, students will be able to describe elasticity of demand; compute elasticity of demand; distinguish between elastic, inelastic, and unit-elastic demand; list the factors that can change the elasticity of demand; and describe the relationship between an increase in price for a good, and higher total revenue. Read Instruct students to read SE pages Focus and Motivate Do the Economics Around the Clock Kickoff Activity, ATE, page 102. Teach Use Transparencies 4-5 and 4-6, DLON, to introduce and explain the concept of elasticity and how it is computed. Use the Reinforcement Activities, ATE, pages 103 and 104, to support a discussion of the factors that determine elasticity of demand. Assign Assign Elasticity of Demand, APW, pages Assess Administer one or more of the following assessment tools: Section 3 Assessment, SE, page 107 Quick Quiz, ATE, page 106 Section 3 Quiz, AB Chapter 4 Assessment, SE, pages Chapter 4 Test A, AB Chapter 4 Test B, AB Reteach/Review As needed, assign the following materials for students requiring further work on the concepts in this lesson: Section 3 Outlining Activity, GRSG Section 3 Just the Facts Handout, GRSG AB = Assessment Book: Tests and Quizzes with Answer Key APW = Applying the Principles Workbook ATE = Annotated Teacher s Edition DLON = Daily Lectures: Overheads and Notes GRSG = Guided Reading and Study Guide SE = Student Edition 60 Lesson Plans SAMPLE EMC Publishing

63 Enrich/Extend Choose from the following features for extension and enrichment: Economics on the Web, SE, page 105 Differentiating Instruction, ATE, page 106 Optional Economic Principles Lectures, Videocassette or DVD Encore CD Finding Economics Internet Resource Center Current Events Lectures/Lessons Practice Tests Study Guide Marketplace Audio Lesson CD Spanish Audio Summaries CD Test Generator CD AB = Assessment Book: Tests and Quizzes with Answer Key APW = Applying the Principles Workbook ATE = Annotated Teacher s Edition DLON = Daily Lectures: Overheads and Notes GRSG = Guided Reading and Study Guide SE = Student Edition EMC Publishing Lesson Plans SAMPLE CHAPTER 4, SECTION 3 61

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