Economic

| January 21, 2016

Part I

Water is incredibly inexpensive and yet is vital to life itself. Without a sufficient supply of clean water, people, animals, crops, and forests would be devastated. Sadly, the supply of water is not easy to control or influence, and in many areas of the country, drought conditions may exist for many years. Use the following websites to learn more about drought and the hardships it creates. Then apply your new knowledge to our discussion of supply and demand.

U.S. Drought Monitor
http://www.drought.unl.edu/dm/monitor.html
How Droughts Affect Us
http://www.drought.unl.edu/DroughtforKids/HowDoesDroughtAffectOurLives.aspx
Drought
http://library.thinkquest.org/10136/drought/droutq.htm
What Causes Droughts?
http://weather.about.com/od/drought/f/droughts.htm

Please respond to all of the following prompts:

What was the most “eye opening” information you learned about droughts? Why did you find it so interesting?
Using the supply-and-demand model, explain what would happen to the supply curve during a drought. Also explain the affect on the price of water as illustrated by the graph.
We know the supply curve for water is not easily changed, (That is, it’s not easy to make rain!) so let us assume a “fixed” supply (In other words, the supply curve is vertical at a given point in time). We also know during times of drought, people are encouraged to conserve water usage. Graphically, what does conservation “look like” on our supply and demand graph? What happens to price? What are the implications for the success of conservation measures and policies?

Part II
Instructional Objectives for this activity:

Relate the concepts of supply and demand to life situations
Identify how the market forces of supply and demand determine prices in a free market system

Firms supply the goods and services that we as households demand. So what are people looking to buy?

Why do they select one product over another?
Can free markets really allocate scarce resources in such an uncontrolled and often chaotic marketplace?
Search the news for stories related to the supply and/or the demand for a product that you find interesting.
Perhaps something that you recently purchased or are considering for a future purchase. What’s in the news and how can you use economic principles to become a better shopper?

IN THE NEWS:
Select a news story from one of the following Internet news organizations.

CNN Money
USA Today Money
Wall Street Journal Market Watch
Wall Street Journal Economy
NY Times Business Day
Reuters Economic News
Yahoo Economic News
NPR Economic News
Forbes Economic News
The Economist

Write a 3 to 5 paragraph summary of the news story and explain how it relates to the material you learned this week.
Do not copy and paste directly from the article except for small quotes that help explain your summary. Use quotations marks for anything that is directly from the news story.
Include the EXACT URL that can be clicked to directly retrieve the news story you selected at the end of your paper for citation purposes. NOTE: This is NOT the link to the news organization. The URL must retrieve the actual news story.

Be sure to reference all sources using APA format.

For citation guidelines, please refer to the table in the APA Style section of the syllabus.

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Category: Essay

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