Week 22 Notes

1
Week 22Notes

• Relationship between Supply, Demand and Market
  Price.
• Scarcity and Opportunity Cost
• Name______________
• Period______________
• Date_______________
• Mr. Furman

2
Supply, Demand, and Market Price

• Supply- The amount of a good or service
  available at a certain price.
• Demand- Amount of people who want to buy a good
  or service at a certain price.

3
Supply, Demand, and Market Price

• Buyer- A person who is willing to buy goods or
  services at a certain price.
• Seller/ Producer- A person willing to sell a
  good or service at a certain price.

4
Supply, Demand, and Market Price

• Market Price- Is the price at which the seller /
  producer is willing to sell their goods or
  services and the buyer is willing to buy them.
  Think of it as bartering or haggling over a
  price.
• A seller must be careful not to sell their
  product for more than it cost them to make, or
  they will take a loss and not make a profit.
• A buyer must be careful not to spend more money
  than what they have or they could go into debt.

5
Supply, Demand, and Market Price
Market Price
50.00
Supply
40.00
Price
30.00
20.00
Demand
10.00
1000
2000
3000
4000
5000
Quantity or Amount of a good or service
6
Scarcity and Opportunity Cost

• Both scarcity and opportunity cost are
  important ideas in understanding how the U.S.
  economy works. They help to determine the value
  of goods and services with in an economy.
• Scarcity- When a good or service is in short
  supply, but demand is very high. It drives up
  the prices people are willing to pay for that
  particular good or service.

Sold Out
7
Scarcity and Opportunity Cost

• Opportunity Cost- When you have a limited or
  scarce amount of resources, such as time, raw
  materials, or money, and you have more than one
  thing you want to do with your resources. You
  are forced to make a decision and pick only one
  to use your resources on. Your opportunity cost
  is the next best thing you gave up and decided
  not to use your resources on. Opportunity cost
  is used to determine the value of goods and
  services within an economy. What were you
  willing to give up in order to get your first
  choice.

I only have .25 I think Ill buy the apple.
.25
.25
Opportunity Cost This is what was given up
8
Stock Market

• A stock market or exchange is a place set up
  for people to buy and sell shares (stock or
  securities) of a company, commodities, mutual
  funds or bonds.
• When you buy stock you are actually buying a
  small piece or part of a company.
• The basic idea behind the stock market is to buy
  shares of a company at one price and hope that
  the price per shares goes up so that when you
  sell them you will make a profit.
•  

9
Stock Market

• Going public, refers to a private company's
  decision to sell shares of the company to the
  public, thus becoming a publicly traded and owned
  business. Businesses usually go public to raise
  money in hopes of expanding the business.
• The business owner contacts a bank, and together
  they decide on the price and how many shares of
  the company will be sold. The bank then buys the
  shares from the business owner. The bank it
  turns sells them on the stock market to the
  public, hoping to sell them for more that the
  originally paid.

10
Stock Market

• Mutual Funds- A group of investors put their
  money together to invest in stocks ,bonds or
  commodities. Another person usually manages the
  fund for the investors.
• Commodities-  A commodity is any homogenous
  item, which may be freely bought and sold. The
  term typically refers to products such as coffee,
  cocoa and soybeans (soft commodities) or gold,
  aluminum and platinum (hard commodities).
• Bonds- The U.S government will sell treasury or
  savings bonds as a way to make money. In return
  the buyer gains interest the longer the hold on
  to the bond.

11
Stock Market

• In the United States we have several stock
  markets.
• NASDAQ- National Association of Securities
  Dealers Automated Quotations. The companies
  trade on the NASDAQ are required to have 500,000
  shares, at least 400 shareholders, and a price of
  at least 5 a share.
• AMEX- American Stock Exchange- This market
  typically has smaller or newer companies in it.
  The AMEX merged with the NASDAQ. 
• - NYSE- The largest and oldest securities
  exchange in the United States. For a company to
  be in this market they must have earned over 2.5
  million dollars and has over 1 million shares of
  the company issued.

12
Stock Market

• Index- Is a company that publishes statistical
  information on the stock market. This
  information helps people to know where to invest
  their money.
•  
• S P 500- (Standard and Poors)- This
  organization lists out the 500 best performing
  stocks.
•  
• Dow Jones Industrial Average (DJIA)- The Dow
  Jones Industrial Average gives information on the
  30 most significant stocks traded on the New York
  Stock Exchange and the NASDAQ. Charles Dow
  created the DJIA back in 1896.

13
Stock Market

• SEC- Securities and Exchange Commission
• Is a part of the Federal government that enforces
  laws to ensure people invest and trade fairly in
  the stock market. It was established in 1934.
  The five members of the commission are appointed
  by the President and approved through the Senate.