# Learning Target: I can explain how supply and demand set prices in a market.

## Supply&Demand

### How do we label the x & y axes?

How do we determine what goes on the x and y axis (think back to MATH)
• x: quantity (independent variable)
• y: price (dependent variable)
• An \$80 pair of sneakers has about \$11 worth of materials in it.

...So why does it cost nearly eight times more?

### How much do new "What the LeBron" cost? Why?

#### Planet Money Episode 584: What The LeBron?

Nike is a smart multi-billion dollar company, but some sneaker fans have figured out how they can get a better price for Nike sneakers than Nike can. Some pairs trade like stocks — selling for double, quadruple, 12 times their retail price after they leave the store. Even used sneakers.

Today on the show, why would a multi-billion dollar company give up its profits to some scrappy guys on the street?

1. "Anywhere there is scarcity and hype, there is a __________."
2. How does Nike make it easy for shoe scalpers?
3. What do you hear "over and over again in line," waiting for the release?
4. How much is a size 11 1/2 going for?
5. Ebay is a "secondary market." What do you think that means?
6. When does project resale price peak (get to its highest price)?
7. What shape does the graph of sneaker price look like?
8. Nike is selling the Air Yeezus for "a 10th of what it's worth." What determines how much its worth?
9. Why would Nike intentionally create the secondary market leaving ~9% of its earnings "on the table"?
10. Why doesn't Nike sell shoes for what they go for on Ebay?
11. Nike increased the supply on release day. Why did the price go down?

<ol>

<li>"Anywhere there is scarcity and hype, there is a __________."</li>
<li>How does Nike make it easy for shoe scalpers?</li>
<li>What do you hear "over and over again in line," waiting for the release?</li>
<li>How much is a size 11 <sup>1</sup>/<sub>2</sub> going for?</li>
<li>Ebay is a "secondary market." What do you think that means?</li>
<li>When does project resale price peak <em>(get to its highest price)</em>?</li>
<li>What shape does the graph of sneaker price look like?</li>
<li>Nike is selling the Air Yeezus for "a 10th of what it's worth." What determines how much its worth?</li>
<li>Why would Nike <em>intentionally</em> create the secondary market leaving ~9% of its earnings "on the table"?</li>
<li>Why doesn't Nike sell shoes for what they go for on Ebay?</li>
<li>Nike <mark>increased</mark> the supply on release day. Why did the price go <mark>down</mark>?</li>

</ol>

# The Economist

1. Pick a product that you use everyday (sneakers, iPhones, a pencil)
2. Identify the resources (land, labor, capital) involved in production.
3. Estimate the cost of production and compare it to the price.
4. How would you describe the relationship between supply and demand?

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<title>Supply & Demand</title>
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<h3>Supply and Demand<br><small>...and Sneakers</small></h3>
</div>

<div <div class="jumbotron">
<div class="container">
<h1>Aim: How do supply & demand function to set prices?</h1>
<h3>Do Now: List the four factors of production and give an example of each.</h3>
</div>
</div>

<div class="titlecard">
<h1>Supply<br>&<br>Demand</h1>
<img src="/images/Supply%26Demand.png">
</div>
<div class="container" style="background-color: white;">
<h3>How do we label the x & y axes?</h3>
<k>How do we determine what goes on the x and y axis (think back to MATH)</kbd>
<li>x: quantity (<code>independent variable</code>)</li>
<li>y: price (<code>dependent variable</code>)</li>

<h3>What is <mark>price sensitivity</mark>?</h3>
</div>

<div class="titlecard">
<p>An <b>\$80</b> pair of sneakers has about <b>\$11</b> worth of materials in it.<br><br>...So why does it cost nearly <b>eight times</b> more?
</p>
</div>

<div id="container">
<h3>How much do new "What the LeBron" cost? Why?</h3>
</div>

<img src="https://espnfivethirtyeight.files.wordpress.com/2014/10/chow-feature-sneaker-1.gif?w=2048" width="100%">

<div class="media">
<div class="media-left">
<a href="#">

<img src="http://media.npr.org/branding/blogs/money/branding_icon-2049217818157ac661fee05d42b0e8b6894aeaaa.png">
<source src="econ_resources/20141119_blog_pmoney.mp3" type="audio/mpeg">
Your browser does not support the audio element.
</audio>
</a>
</div>

<div class="media-body">
<h4 class="media-heading">Planet Money Episode 584: What The LeBron?</h4>
<blockquote>Nike is a smart multi-billion dollar company, but some sneaker fans have figured out how they can get a better price for Nike sneakers than Nike can. Some pairs trade like stocks — selling for double, quadruple, 12 times their retail price after they leave the store. Even used sneakers.</p>
<p>Today on the show, why would a multi-billion dollar company give up its profits to some scrappy guys on the street?</p></blockquote>
</div>
</div>

<ol>

<li>"Anywhere there is scarcity and hype, there is a __________."</li>
<li>How does Nike make it easy for shoe scalpers?</li>
<li>What do you hear "over and over again in line," waiting for the release?</li>
<li>How much is a size 11 <sup>1</sup>/<sub>2</sub> going for?</li>
<li>Ebay is a "secondary market." What do you think that means?</li>
<li>When does project resale price peak <em>(get to its highest price)</em>?</li>
<li>What shape does the graph of sneaker price look like?</li>
<li>Nike is selling the Air Yeezus for "a 10th of what it's worth." What determines how much its worth?</li>
<li>Why would Nike <em>intentionally</em> create the secondary market leaving ~9% of its earnings "on the table"?</li>
<li>Why doesn't Nike sell shoes for what they go for on Ebay?</li>
<li>Nike <mark>increased</mark> the supply on release day. Why did the price go <mark>down</mark>?</li>

</ol>

<div id="economist">
<h1>The Economist</h1>
<ol>
<li>Pick a product that you use everyday (sneakers, iPhones, a pencil)</li>
<li>Identify the resources (land, labor, capital) involved in production.</li>
<li>Estimate the cost of production and compare it to the price.
</li>
<li>How would you describe the relationship between supply and demand?</li>
</div>