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perloff_0321374584_IM_Part1_C02

perloff_0321374584_IM_Part1_C02 - Chapter 2 Supply and...

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Chapter 2 Supply and Demand Chapter Outline 2.1 Demand The Demand Curve The Demand Function Summing Demand Curves 2.2 Supply and demand The Supply Curve The Supply Function Summing Supply Curves Effects of Government Import Policies on Supply Curves 2.3 Market Equilibrium Using a Graph to Determine the Equilibrium Using Math to Determine the Equilibrium Market Forces Drive the Market to Equilibrium 2.4 Shocking the Equilibrium Effects of a Shift in the Demand Curve Effects of a Shift in the Supply Curve 2.5 Effects of Government Interventions Policies That Shift Supply Curves Policies That Cause Demand to Differ from Supply Why Supply Need Not Equal Demand 2.6 When to Use the Supply-and-Demand Model Teaching Tips This chapter reviews basic supply and demand concepts from the principles level. Your interactions with the class from the first session or two should give you a good indication of how much class time to spend on it. If it has been some time since their principles course, students may need fairly consistent prompting to recall the basic supply-and-demand model. For example, many will remember that there is a Law of Demand, but won’t remember the law itself. Encourage students in the strongest terms to read the chapter carefully. It is well worth the time spent at this stage to make sure everyone has solid recognition of these basic tools and concepts.

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8 Part 1 Teaching Aids When reviewing demand, be sure students are clear on the difference between movement along the curve and a shift of the entire curve. Two points should be helpful. First, note to them that both in Equation 2.3 and on the graph in Figure 2.1, price is the only independent variable present. Thus, only price can cause a movement along the curve. Second, underscore the role of other variables. After compiling a list of the factors that can shift the demand curve (once they get started, the class as a group should be able to provide you with this list), I ask what factors are held constant along a single demand curve. Surprisingly, this question is often greeted by a protracted silence. By realizing that it is the same factors that shift the curve when they change, students develop a more solid understanding. The text makes this point well in Equations 2.2 and 2.3. The introduction of demand curves and equations is a good opportunity to review the basic geometric concepts of slope and intercept. This doesn’t take much time, as most students can recognize slope and intercept of a written equation, but there is sometimes a surprising lack of connection between what appears in an equation and the resulting graph. Draw a demand curve and tell the class that the slope of this curve is –2. Then ask the students what will happen in the graph if the slope increases to –4. Although it is likely that several, perhaps most students will know immediately, some will not. I try to use the simple algebra and geometry in these early chapters to help me to gauge what portion of the class is likely to struggle when the material gets tougher. Assigning some of the quantitative problems at the end of the
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perloff_0321374584_IM_Part1_C02 - Chapter 2 Supply and...

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