Transcript MODULE 16: SUPPLY AND DEMAND

Changes in Demand
• Demand Curves shift in response to the
following factors:
– Tastes: changes in preference or popularity of
product/ service changes in the number of
consumers
– Income: changes in consumers’ income
– Related goods: compliments and substitutes
– Expectations: changes in what consumers
expect to happen in the future
– Size of Market (# of): changes in the number
of consumers
• TIRES: factors that shift the demand
curve
Supply Shifters
Cost of inputs
Government Policies
oTaxes
oRegulations
oSubsidies
Number of Firms
Technology
Natural Disasters and Weather
Expectations about Future Prices
Wednesday, 5/13/15, Day 1
Essential Skill: DEMONSTRATE UNDERSTANDING of CONCEPTS
1-Test: Friday, 5/15 [Modules: 10-11, 13-14, 16-17, 18 ]
2-Module 18 notes [pages: 205-209]
•Due: Tomorrow
3-Supply and Demand: Single and Double Shifts
INCREASE IN DEMAND
An increase in
demand =
increase in
PRICE and
QUANTITY.
DECREASE IN DEMAND
A decrease in
demand =
decrease in
PRICE and
QUANTITY.
INCREASE IN SUPPLY
An increase in supply =
decrease in PRICE and an increase in
QUANTITY.
DECREASE IN SUPPLY
A decrease in supply =
increase in PRICE and a decrease in
QUANTITY.
Summary of Single Shifts
1-If Demand Increases, then Price Increases and
Quantity Increases
2-If Demand Decreases, then Price Decreases
and Quantity Decreases
3-If Supply Increases, then Price Decreases and
Quantity Increases
4-If Supply Decreases, then Price Increases and
Quantity Decreases
Single Supply and Demand Shift Practice
Respond to Scenarios 1-4 on the Supply and
Demand Shift Sheet [6.17.1]
CHANGES IN BOTH SUPPLY AND
DEMAND
If supply and
demand decrease
by the same
amount, price will
be unchanged and
the quantity will
decrease.
CHANGES IN BOTH SUPPLY AND
DEMAND
If supply increases
and demand
decreases, the
price will decrease
and the quantity
will not change.
Summary of Double Shifts
1-If Demand Increases, and Supply Increases then Price
is Unknown and Quantity Increases
2-If Demand Increases, and Supply Decreases then
Price Increases and Quantity is Unknown
3-If Demand Decreases, and Supply Decreases then
Price Unknown and Quantity Decreases
4-If Demand Decreases, and Supply Increases then
Price Decreases and Quantity Is Unknown
Double Shifts of Supply and Demand
Respond to Scenarios 1-4 on the Double Shifts
Sheet [6.17.2]
Create one single shift and one double shift scenario.
Name the shifter or shifters for both scenarios.
• Graph your scenarios including:
• Supply and Demand curves
• Initial and new equilibriums
• Price and quantity change