# The Guts of Demand:

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```					                                    The Guts of Demand:
Elasticity, Utility, and Surplus

Day   Date   In class                         Homework
0           Go over Supply and               Read, highlight, and annotate Gwartney pp. 59-60,
Demand test.                     and 425-430.
REVIEW SPIRAL: STANDARD PPC and 2 PPC
TRADE MODEL; PRICE SHIFTS FROM EQULIBRIUM;
and SUPPLY and DEMAND SHIFTS.

1           A very snappy topic: when        Complete the worksheet, “Price Elasticity of
“Q” changes a lot even           Demand I.”
though “P” only went up a        Read, highlight, and annotate Mankiw, Principles of
little- elasticity.              Economics, 94-96.
Read, highlight, and annotate Gwartney pp. 66-68,
432, and 482-483.
Microeconomics, pp. 81-84.

2           Firms using elasticity as a      Complete the worksheet, “Price Elasticity of
tool:                            Demand II.”
Pricing for profit using price   Complete worksheet, “Price Elasticity of Supply.”
elasticity of demand.            Read, highlight, and annotate Gottheil pp. 76-81.
When firms need to sell:         REVIEW SPIRAL: PRICE ELASTICITY OF DEMAND-
inelastic supply.                FORMULA, RANGE OF CURVES, RANGE ALONG A
DEMAND CURVE, and TR.

3           Is a PC a substitute for or a    Complete the worksheet, “Elasticities.”
complement of DVDs?              Read, highlight, and annotate Friedman’s, Hidden
Cross- price elasticity offers   Order: The Economics of Everyday Life, pp. 41-53.
What the heck is an inferior
good?

4           Which shall bring more           Finish the worksheet, “A Dry Run With Rational
utils: crackers or cookies?      Choice Theory.”
Read, highlight, and annotate Gwartney pp. 419-
424.

5           The mathematics of               Complete the worksheet, “Marginal Utility
Rational Choice Theory and       Read, highlight, and annotate Gwartney pp. 57-59.
the Rule of Utility
Maximization.

6           For every choice benefits        Complete the worksheet, “Consumer Surplus.”
must exceed costs so, what       Read, highlight, and annotate Gwartney pp. 66.
is the extra benefit called?     Read, highlight, and annotate Friedman pp. 54-60.
No, it is not the same thing     REVIEW SPIRAL: OTHER ELASTICITIES and
as utility (it is only part of   UTILITY MAXIAMIZATION.
utility.).
7    A synonym for profit,        Complete the worksheet, “Producer Surplus.”
producer surplus.            Read, highlight, and annotate Gwartney pp. 72-73,
and 93-97.
REVIEW SPIRAL: CONSUMER SURPLUS and
PRODUCER SURPLUS.

8    A taxing subject:            Complete the worksheet, “Tax Burden and
determine the efficiency     REVIEW SPIRAL: TAX BURDEN.
impact and burden of
government actions.

9    Review problems.             Study: the concepts (elasticities, utility maximization,
and surpluses), the models, and the vocabulary.

10   The test: 50% on multiple-   Next calendar.
choice, and 50% on two
free-response questions.

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