activator - ch. 4 sec 1 three people enter a mazda dealership all interested in buying a brand new...

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Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda RX8. The first person tells the salesperson that they “really like the RX8” but they “don’t have any money today”, and are “saving their money for a purchase within the next 6 months”. The second person tells the dealer that they “have the money to buy”, they “are going to ultimately buy RX8”, but they are shopping various dealerships and are “not willing to buy today”. The third person tells the dealer that they “love the RX8!”, they “have the money” and they “want to buy it today.” Answer the following questions based on the above scenario: 1. List each customer (1-3). Next to each customer, write each of the following that apply to their situation: 1. Desire to buy 2. Willingness to buy 3. Ability to buy 2. Which customer do think was most appealing to the salesperson, and why? 3. Which customer would you have helped first, and why?

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Page 1: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Activator - Ch. 4 Sec 1

• Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda RX8. The first person tells the salesperson that they “really like the RX8” but they “don’t have any money today”, and are “saving their money for a purchase within the next 6 months”. The second person tells the dealer that they “have the money to buy”, they “are going to ultimately buy RX8”, but they are shopping various dealerships and are “not willing to buy today”. The third person tells the dealer that they “love the RX8!”, they “have the money” and they “want to buy it today.”Answer the following questions based on the above scenario:

1. List each customer (1-3). Next to each customer, write each of the following that apply to their situation:

1. Desire to buy

2. Willingness to buy

3. Ability to buy

2. Which customer do think was most appealing to the salesperson, and why?

3. Which customer would you have helped first, and why?

Page 2: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Chapter 4 - DemandSection 1 – Understanding Demand

Demand – desire, ability, and willingness to buy a good/serviceThe amount of a product that a consumer (individual) or group of consumers (market) will purchase at a given price In a market system, buyers and sellers determines the prices of goods and servicesMicroeconomics – The study of the economic behavior and decision making of small units, such as individuals, families, and firms (businesses)

Page 3: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Application Chart – Demand

Make a three column chart that represents 3 items that you want on one side, whether you can afford them or not in the next, and whether you are willing to buy them in the last.

Desired Items Ability/Afford Willingness Demand

1.

2.

3.

Page 4: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

The Law of Demand

Law of Demand –prices are lower, consumers will buy more; prices are higher, consumers will buy less.

Inverse relationship between price and the QD of a product.

Prices strongly influence the quantity demanded of a product

Demand

Quantity Demanded Increases

Price

Prices of ProductsDecreases

Price

Prices ofProduct

Increases

Demand

Quantity DemandedDecreases

Page 5: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Change in Quantity Demanded

$3.50 $1.00

Page 6: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Change in Quantity Demanded

$3.50 $1.00

Page 7: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

The Income Effect

Income Effect – the change in consumption resulting from a change in price, “more bang for your buck”

Consumers feel richer when prices drop, poorer when prices rise. Both affect the Quantity Demanded of a product.

Page 8: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

The Income EffectPurchases

http://www.youtube.com/watch?v=JC7KB-HF6ao&feature=related

http://www.youtube.com/watch?v=_87YZPSdHX8&feature=related

More Bang for your Buck

http://www.youtube.com/watch?v=4hZ9g4xo24A&feature=player_detailpage#t=2s

Page 9: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Substitution Effect

Substitution Effect – when consumers react to an increase in a good’s price by consuming less of one good and more of other goods

                                                                                                                                                                

                                                             

$3.99 $4.99 $3.99

Page 10: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

The Demand Schedule

Price of Ice Cream

Quantity Demanded

$3.00 0

2.50 2

2.00 4

1.50 6

1.00 8

.50 10

.10 12

• Demand Schedule - a table that lists the quantity of a good that a person will purchase at each price in a market•Market Demand Schedule - lists the quantity of a good that all consumerswill purchase at each price in the market

Price of Ice Cream

Quantity Demanded

$3.00 0

2.50 30

2.00 50

1.50 100

1.00 200

.50 300

.10 400

Page 11: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Application - The Demand Curve

Price per Ice Cream Cone

1.50

2.00

2.50

$3.00

1.00

0.50

0 1 2 3 4 5 6 7 8 9 10 11 12Quantity Demanded of Ice-Cream Cones per week

Price Quantity

$3.00 0

2.50 2

2.00 4

1.50 6

1.00 8

.50 10

.10 12

• Demand Curve - graphically represents the demand schedule• Demand Curve is downward sloping because of the law of demand

Page 12: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

• Plot the demand schedule below, which represents 2004 Florida Marlins avg. sales per game (in thousands)

Price 2004

$40.00 0

35.00 4

30.00 6

25.00 8

20.00 10

15.00 12

10.00 14

Playoffs

8

10

14

16

18

22

24

Chapter 4 Section 2

Price per Ticket

20.00

25.00

30.00

$40.00

15.00

10.00

0 2 4 6 8 10 12 14 16 18 20 22 24Quantity Demanded of Tickets

35.00Next Season

0

0

2

4

8

10

12D1 D2D3

Page 13: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Section 2 - Shifts of the Demand Curve

Changes in Demand are reflected as a shift in the curve

Shifts to the right indicate an increase in demand

Shifts to the left indicate a decrease in demand Demand

curve, D 1

Demandcurve, D 2

0

Increasein demand

Price

Quantity Demanded

Demand curve, D 3

Decreasein demand

Page 14: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Difference Between A Change in Quantity Demanded and a Change in Demand

QD - A change in the amount a consumer will purchase as a result of a change in price (ceteris paribus – all other things constant)

Reflected as movement along the curve D – A change in the amount a person will buy as a result of an outside factor

(change in ceteris paribus - popularity of product, consumer income, etc.) Reflected as a shift in the curve

Page 15: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Flow Chart – Determinants of Demand – pgs. 85 - 87

Consumer Income

Consumer Expectations

Population Consumer Tastes and Advertising

Price of Related Goods

DescriptionConsumer Income

has a major influence on a

consumer’s demand

Description Description Description Description

What Causes a Shift?

Example of Decrease Demand

People are paid less they buy less normal goods and

more inferior goods

Example of Decrease Demand

Example of Decrease Demand

Example of Decrease Demand

Example of Decrease Demand

Example of Increase DemandPeople are paid more, they buy more normal

goods

Example of Increase Demand

Example of Increase Demand

Example of Increase Demand

Example of Increase Demand

Page 16: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

What Causes a Shift?1. Consumer Income 2. Consumer Expectations3. Population4. Consumer Tastes and

Advertising5. Price of Related ProductsGroup Assignment (pg. 86-88):

Create a scenario that represents each of the five determinants of demand.

Provide a scenario that shifts the demand curve to the right and the left.

Page 17: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Consumer Income Consumer Income – A consumer’s income affects their

demand for most goods and services Increase in income will cause an increase in consumption Decrease in income will cause a decrease in consumption Normal good – Inferior good –

Page 18: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Price of Related Goods

Price of related goods – demand for goods can be affected by the price for related goods

Complements – the demand of one good increases as a result of the purchase of another good

Substitutes – the demand for one good decreases because another good is used in its place

Page 19: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Consumer Tastes and Advertising

Consumer Tastes and Advertising – changes in popularity of products or the influence of trends and advertising can affect demand

Popularity of product decreases, decreases in demand Popularity of a product increases, increases in demand

http://www.youtube.com/watch?v=4OhrQMnOYOQ&feature=player_detailpage#t=34s

http://www.youtube.com/watch?v=m02-lyUOH5M&feature=player_detailpage#t=61s

Page 20: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Consumer Expectations

Consumer Expectations – refers to the way people think about the future, as it relates to consumption

Expectations for the future can affect consumption for the present

Page 21: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Population

Population – an increase in the number of consumers can cause an increase or decrease in the demand for products

Increase in population, increase in demand Decrease in population, decrease in demand

Page 22: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Demand Application – Average sales of SUV’s per month (in millions)

Price Early 90’s

$55 0

50 2

45 4

40 6

35 8

30 10

25 14

Late 90’s

2

4

6

8

10

14

20

•Plot the demand schedule below. The graph represents the demand for SUV’s during the early 1990’s. During the late 1990’s SUV’s became increasingly popular in the United States. During the mid 2000’s, gas prices increased nationally to average rates around 5.00 per gallon. Consumers expected these prices to remain in the future, which affected the demand for SUV’s around the country.

Gas Hikes

0

1

2

3

4

6

8

Price per SUV

20

25

30

$55

15

10

0 2 4 6 8 10 12 14 16 18 20 Quantity Demanded of SUVs

40

45

50

35

Page 23: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Demand Application – Average sales of SUV’s per month (in millions)

Price per SUV

20

25

30

$55

15

10

0 2 4 6 8 10 12 14 16 18 20 Quantity Demanded of SUVs

40

45

50

35

D1 D2D3

1. How did the curve change from the early 90’s to the late 90’s

2. What was the cause of the change from the early 90’s to the late 90’s?

3. What happened to the curve after the gas hikes?

Page 24: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Chapter 4 Section 3

1. List 2 items that you would buy less of if the price increased

2. List 2 items that you would buy more of if the price decreased

3. List 2 items that you would continue to buy, even if the increased

Page 25: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Section 3 – Elasticity of Demand

Elasticity of Demand –how consumers will cut back or increase their quantity demanded for a product when prices rise or fall

Measures the extent to which changes in price causes changes in quantity demanded.

Helps determine how much a price change will influence the qd of any given product

Page 26: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Elastic Demand

Elastic – consumption changes drastically when a price rises or falls

A consumer is very responsive to price changes

Page 27: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Inelastic Demand

Inelastic - changes in price causes a relatively small change in quantity demanded

Consumers continue to purchase regardless of price change

Page 28: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Determinants of Demand Elasticity

1. Availability of Close Substitutes

• Pepsi/Coke, Butter/Margarine

2. Relative Importance

• How much you spend on a good

• Table salt versus designer clothes

3. Necessities versus Luxuries

• Medicine versus a luxury automobile

4. Change over time

• Longer time horizon – more elastic

• Gas in the short run is inelastic, but over time elastic

Page 29: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Values of Elasticity Elasticity has a precise mathematical definition

Percentage change in quantity demanded

Percentage change in price Value is less than 1, it is considered inelastic.

Inelastic – Demand is < 1 Value is greater than one, demand is elastic.

Elastic – Demand is > than 1 Value is equal to one, demand is unitary elastic.

Unitary Elastic – Demand is = 1

Page 30: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

The Midpoint MethodPrice Elasticity =

Price

8.00

$10.00

0 8 10

Quantity

10 – 8_ 9

22% 22%

= .22

= 1

$10 – 8_ $9

= .22

Unitary Elastic

A

B

B A

10 – 8__ 9

.22 .22

= .22

= 1

$10 – 8 9

Unitary Elastic

A B = .22

(Q2 – Q1) / [(Q2+Q1) / 2] (P2 – P1) / [(P2 + P1) / 2]

Page 31: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Application – Elasticity of Ice Cream Cones

Price

3.00

5.00

6.00

$7.00

2.00

1.00

0 5 10 15 20 25 30 35 Quantity Demanded of Ice-Cream Cones per week

4.00

$4 – 3 $3.5

.67_ .29

= .29

= 2.3

20 – 10 15

= .67

Elastic

Price Elasticity = (Q2 – Q1) / [(Q2+Q1) / 2] (P2 – P1) / [(P2 + P1) / 2]

(Q2 – Q1) / [(Q2+Q1) / 2]

(P2 – P1) / [(P2 + P1) / 2]

% change in qd% change in price

Page 32: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Application – Elasticity of Table Salt

Price

3.00

5.00

6.00

$7.00

2.00

1.00

0 5 10 15 20 25 30 35 Quantity Demanded of Table Salt

4.00

$6 – 2 $4

40 100

= 1

= .4

15 – 10 12.5

= .40

Inelastic

Price Elasticity = (Q2 – Q1) / [(Q2+Q1) / 2] (P2 – P1) / [(P2 + P1) / 2]

(Q2 – Q1) / [(Q2+Q1) / 2]

(P2 – P1) / [(P2 + P1) / 2]

% change in qd% change in price

Page 33: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Total Revenue

• Total Revenue – the amount paid by buyers and received by sellers of a good• Price of the goods x quantity demanded = Total Revenue

Price of a slice of pizza Quantity Demanded

Per day

Total Revenue

$.50 300 150

$1.00 250 250

$1.50 200 300

$2.00 135 270

$2.50 100 250

$3.00 50 150

Page 34: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

•Use the formula to show how you determine elasticity of demand for the graph.• Q2 _______ - Q1_______ = ______ / Q2 ______+ Q1 _______ / 2 = _______ = ________• P2 _______ - P1_______ = ______ / P2 ______+ P1 _______ / 2 = _______ = ________•- Elasticity QD______ P______P = ________•Did the price change cause an elastic or inelastic response in the QD for ice cream cones? ________________________________________________

20 10 10 20 10 15 .67

Elasticity Application 1

.67 . 50 1.34

Elastic

(Q2 – Q1) / [(Q2+Q1) / 2] (P2 – P1) / [(P2 + P1) / 2]

5 3 2 5 3 4 .50

Page 35: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Elasticity Application 2

•Use the formula to show how you determine elasticity of demand for the graph.• Q2 _______ - Q1_______ = ______ / Q2 ______+ Q1 _______ / 2 = _______ = ________• P2 _______ - P1_______ = ______ / P2 ______+ P1 _______ / 2 = _______ = ________•- Elasticity QD______ P______P = ________•Did the price change cause an elastic or inelastic response in the QD for insulin? ________________________________________________

8 5 3 8 5 6.5 .46

.46 1 .46

Inelastic

6 2 4 6 2 4 1

(Q2 – Q1) / [(Q2+Q1) / 2] (P2 – P1) / [(P2 + P1) / 2]

Page 36: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Elasticity Application 3Scenario: The Apple store in St. John’s Mall made the decision to drop the price of their Ipod Nano from $150 to $125. As a result, the sale of Nano’s increased from 200 a week to 250. - Create a Demand Schedule and Curve based on the above information.

Price of Nanos

QD per week

Price Per Ipod Nano

QD 0

2. Did the price change cause an elastic or inelastic response in the QD for Nano’s? ___________________3. If the firm drops their price by _________%, they will see an increase in sales of __________% 4. To determine if this is a good decision for the firm, calculate the total revenue of each price:- Multiply the first price of the Nano by the first QD – $______ x _______ = ___________________- Multiply the second price of the Nano by the second QD – $ ______ x _______ = __________________5. Which price point generates the most total revenue? ______________________

150

125

200

250

Elastic18 22

150 200 $30,000 125 250 $31250

125

150

125

200 250 •Use the formula to show how you determine elasticity of demand for the graph.• Q2 _______ - Q1_______ = ______ / Q2 ______+ Q1 _______ / 2 = _______ = ________• P2 _______ - P1_______ = ______ / P2 ______+ P1 _______ / 2 = _______ = ________•- Elasticity QD______ P______P = ________

250 200 50 250 200 225 .22

.22 .18 1.22

150 125 25 150 125 137.5 .18

Page 37: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

•What is the price elasticity of demand when the price changes from $1 to $2? _________*Use the midpoint method formula to determine the answer to #1* Q2 – Q1__ ________ (Q2 + Q1)/2 = ________________ = ___________ P2 – P1__ ________ (P2 + P1)/2

201701

1.5

.12

.67

.18

Based on the above result, demand for Moonbucks coffee at this price range is (elastic/unit elastic/inelastic)

Page 38: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

•What is the price elasticity of demand when the price changes from $5 to $6? _________*Use the midpoint method formula to determine the answer to #1* Q2 – Q1__ ________ (Q2 + Q1)/2 = ________________ = ___________ P2 – P1__ ________ (P2 + P1)/2

20 901

5.5

.22

.18

1.22

Based on the above result, demand for Moonbucks coffee at this price range is (elastic/unit elastic/inelastic)

Page 39: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

The Midpoint MethodPrice Elasticity =

Price

8.00

$10.00

0 8 10

Quantity

10 – 8_ 9

22% 22%

= .22

= 1

$10 – 8_ $9

= .22

Unitary Elastic

A

B

B A

10 – 8__ 9

.22 .22

= .22

= 1

$10 – 8 9

Unitary Elastic

A B = .22

(Q2 – Q1) / [(Q2+Q1) / 2] (P2 – P1) / [(P2 + P1) / 2]

Page 40: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

The Flaw in Point Elasticity of DemandElasticity = Percentage change in Quantity Demanded/Percentage change in Price

Price

8.00

$10.00

0 8 10

Quantity

10 – 8 X 100 10

20% 25%

= 20%

= .8

$8 – 10 X100 $8

= 25%

Inelastic

A

B

B A

8 – 10 X 100 8

25% 20%

= 25%

= 1.25

$10 – 8 X100 $10

Elastic

A B = 20%

% Q % P

Page 41: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Determinants of Demand Elasticity

1. Can The Purchase Be Delayed?

• Insulin, gas, cigarettes, etc…

2. Are Adequate Substitutes Available?

• Pepsi/Coke, Steaks/Chicken, etc…

3. Does the Purchase Use a Large Portion of Income?

• Table Salt vs. Automobiles

Determinants of Elasticity

Brand New BMW Gasoline Insulin

Can the purchase be delayed ?

Yes No No

Are adequate substitutes available?

Yes No No

Does the purchase use a large portion of income?

Yes Yes No

Type of Elasticity Elastic Inelastic Inelastic

Page 42: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Law of Diminishing Marginal Utility

Diminishing Marginal Utility – a decrease in the (utility) usefulness due to the reduced satisfaction of a product.

Utility – usefulness of a good/service to a consumer.

Page 43: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Law of Diminishing Marginal Utility

Buy 1 pair get 2nd ½ price

Page 44: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Do Now – Ch. 5 Sec 1• Following graduation, Braden McElroy opens a smoothie shop called, .

Initially, he needs to determine the products that he wishes to sell at the shop. He decides that he will offer 5 main types of smoothies on his menu

1. Braden’s Berry Blastoff

2. Braden’s Banana Bonanza

3. St. Simon’s Succulent Strawberries

4. Brunswick’s Blueberry Lagoon

5. Mocha Marsh Surprise

• During the first month of operation he offered all of his smoothies at 3.99. He found that people were willing to purchase “Braden’s Berry Blastoff”, “Braden’s Bananza Bonanza” and “St. Simon’s Succelent Strawberries”. Ultimately, Mocha Marsh Surprise sold very little, and he could barely keep “Brunswick’s Blueberry Lagoon in stock.

1. What should Braden do with the price of #’s 1, 2, and 3?

2. What should he do with the price of #4?

3. What might he do with number 5?

Page 45: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Application – Revenue Table

• Revune – amount of money a company receives by selling its goods• Price of the goods x quantity demanded = Total Revenue

Price of a slice of pizza Quantity Demanded

Per day

Total Revenue Increase/Decrease Total Revenue

$.50 300 NA

$1.00 250

$1.50 200

$2.00 135

$2.50 100

$3.00 50

Page 46: Activator - Ch. 4 Sec 1 Three people enter a Mazda dealership all interested in buying a brand new car. All three initially stop to look at the Mazda

Application – Revenue Table

• Revune – amount of money a company receives by selling its goods• Price of the goods x quantity demanded = Total Revenue

Price of a slice of pizza Quantity Demanded

Per day

Total Revenue Increase/Decrease Total Revenue

$.50 300 $150 NA

$1.00 250 $250 Increase

$1.50 200 $300 Increase

$2.00 135 $270 Decrease

$2.50 100 $250 Decrease

$3.00 50 $150 Decrease