Mod1Day1

ECO 202
Module 1 - Lesson Plan 1

Principles of Economics 2
Microeconomics

Elasticities of Demand and Supply

Administration and Preview

Class Activities

Summary - Course Objectives

Your Homework

Love for Econ...

Administration and Preview

Administrative Matters (Read these on your own time.)

For students taking ECO 202 in class:

For distance learning students taking ECO 202 by Internet and email:

If you attending an in-class session, always begin by:

1. signing the class roster;
2. taking one copy of any handouts;
3. making and displaying a name card; and
4. introducing yourself to a study partner.

Items 1 through 3 in the right-hand column also apply to in-class students:

Item 1 tells you when to refer to your syllabus;
Item 2 tells you when to refer to the fifteen-week-outline;
Item 3 tells you we will study the 15 modules in sequence from 1 through 15.

Begin your final exam issue-paper at any time using guidance from your syllabus, Section VIII.

You can locate the course objectives for each module of study and the daily class outlines of study for each module under the 15-module-calendar link for ECO 202 on the instructor homepage at http://www.ph.vccs.edu/eco.

You can locate the syllabus for ECO 202 on the instructor homepage either by the clicking syllabi link and choosing ECO 202 or by clicking the course cover page link on the homepage and then clicking the syllabus link.

You can email your instructor at tmeyer@ph.vccs.edu or leave voicemail at (276) 656-0283.
Always mention the course you are taking in your message, because the answer to your questions are course-dependent.

Here are six guidelines to help you begin successfully.

1. Refer to the syllabus:
    a. if you need to contact the instructor (Section I);
    b. if you need the correct book and study guide (Section VII).
    c. if you need to know how you are graded (Section VIII);
    d. if you want guidance on exam grades, participation grades, or writing your final exam issue-paper (Section VIII).
     e. if you need a proctor request form, email cford@ph.vccs.edu .
      f. if you need help with BlackBoard, email mnelson@ph.vccs.edu .
2. Refer to the fifteen-module calendar to find:
    a. the course objectives for each module;
    b. the Lesson Plan Part I and Lesson Plan Part II outline for each module;
    c. the review and exam guidance during modules 5,10, and 15.
3. Study the modules in sequence from 1 through 15.

4. Notify the instructor when you are ready to take the course exams in the Learning Resource Center during modules 5, 10, and 15.
5. Notify the instructor when you have completed each exam so I can grade them promptly.
6. Begin your final exam issue-paper at any time by following Section VIII guidance in the syllabus.

You can enter ECO 202 via Blackboard at:

http://dl.ph.vccs.edu or

http://Blackboard.ph.vccs.edu

If these links are not functioning, type the following into your browser to get to the Blackboard log-in page:

http://www.ph.vccs.edu/eco

You can email your instructor at tmeyer@ph.vccs.edu or leave voicemail at (276) 656-0283. Always mention the course you are taking in your message, because the answer to your questions are course-dependent.

Academic Matters (We'll discuss these five concepts from the book.)

1. Elasticities are tools.
Elasticities are tools that enable economists and entrepreneurial persons to take specific measurable actions.
- These actions increase business profits and sales.
- These actions work very well because they measure the responsiveness of quantities made and sold to changes in price, in income, and to changes in the prices of other substitutes and complementary goods.

2. Each tool has a specific use.
Each elasticity in economics is a tool with specific uses.
Each elasticity is a specific number.
The size of the number (and type of elasticity) tell you as a business person what to do.

3. There are four types of elasticity.
Elasticities are of four kinds:
A. Elasticity of Demand
B. Elasticity of Supply
C. Income Elasticity
D. Cross-Price Elasticity

4. Each elasticity is a ratio.
- The four elasticities are each ratios.

- Each ratio is a percentage change in a variable in the numerator divided by a percentage change in the variable in the denominator.

Elasticity of demand is the percent change in quantity demanded divided by the percent change in price.
Elasticity of supply is the percent change in quantity supplied divided by the percent change in price.
Income elasticity is the percent change in quantity demanded divided by the percent change in price.
Cross-price elasticity is the percent change in quantity demanded of good A divided by the percent change in price of its substitute or complement.

5. Here's the smart way to begin this chapter:
Step 1. The first thing to do is to learn how economists compute a percentage change in a variable.
Step 2. The second thing to do is divide the two percent changes to compute a pure number.
Step 3. The third thing to do is to take the correct action based upon the size of the pure number.

Class Activities

5.1 Define, explain the factors that influence, and calculate the price elasticity of demand.

5.2 Define, explain the factors that influence, and calculate the price elasticity of supply.

Summary - Course Objectives

5.1 Define, explain the factors that influence, and calculate the price elasticity of demand.

A. The demand for a good is elastic if when its price changes, the percentage change in the quantity demanded exceeds the percentage change in price.

B. The demand for a good is inelastic if when its price changes, the percentage change in the quantity demanded is less than the percentage change in price.

C. The price elasticity of demand for a good depends on how easy it is to find substitutes for the good and on the proportion of income spent on it.

D. Price elasticity of demand equals the percentage change in the quantity demanded divided by the percentage change in price.

E. The total revenue test says that:
If demand is elastic, a rise in price leads to a decrease in total revenue. If demand is unit elastic, a rise in price leaves total revenue unchanged. And if demand is inelastic, a rise in price leads to an increase in total revenue.

5.2 Define, explain the factors that influence, and calculate the price elasticity of supply.

A. The supply of a good is elastic if when its price changes, the percentage change in the quantity supplied exceeds the percentage change in price.

B. The supply of a good is inelastic if when its price changes, the percentage change in the quantity supplied is less than the percentage change in price.

C. The main influences on the price elasticity of supply are the flexibility of production possibilities and storage possibilities.

Your Homework

Complete all portions of the textbook and study guide relating to Checkpoint 5.1 and 5.2 on Elasticities of Demand and Supply.

Take the optional post-study bonus point quizzes on Elasticities of Demand and Supply on Saturday following Module 1.

Take the optional pre-study bonus point quizzes on Efficiency and Fairness of Markets on Sunday preceding Module 2.

Then read and study Elasticities of Demand and Supply course objective 5.3 in your textbook and study guide
before attending the next class session.

Virtual Tour Site

Take a virtual trip on behalf of Patrick Henry Community College to the following website containing:

http://aei.org

Founded in 1943 and located in Washington, D.C.,
the American Enterprise Institute for Public Policy Research (AEI)
is one of America's largest and most respected "think tanks."

Love for econ springs eternal !