Transcript The 5 Powers of Economic Thinking (dun dun dun!!!)

Graphing Heaven
Steps to Drawing a Supply and Demand Graph
Price ($)
Draw the axes
S
Label the axes
Draw the curves
P1
Label the curves
E
D
0
Q1
Find and label the
starting price and
quantity
Quantity (Q)
5 Steps to Graphing Heaven
Step 2- Read the situation and answer questions 1, 2, and 3
Situation- Consumers love big screen TV’s. What impact
does this have on the price and quantity of big screen TV’s?
1. Which determinant of supply or demand is affected?
Demand Determinants (SEPTIC)
1. Substitutes
2. Expectations
Supply Determinants
Expectations
3. Population
Number of
Suppliers/Producers
4. Taste
Cost of Production
5. Income
6. Complements
Taste!
5 Steps to Graphing Heaven
Step 2- Read the situation and answer questions 1, 2, and 3
Situation- Consumers love big screen TV’s. What impact
does this have on the price and quantity of big screen TV’s?
2. What is affected supply or demand?
Demand!
3. Which way does the curve shift?
Away from 0, from D1 to D2
5 Steps to Graphing Heaven
Step 3- Draw the shift and label everything
Price (P)
S
P2
P1
D2
D1
0
Q1
Q2 Quantity (Q)
5 Steps to Graphing Heaven
Step 4- Answer question 4
Price (P)
S
P2
4. Movement along
which curve?
∆Qs; Movement
along the S curve
P1
D2
D1
0
Q1
Q2 Quantity (Q)
5 Steps to Graphing Heaven
Step 5- Answer questions 5 (both parts)
Price (P)
S
5. What happens to
price?
Price increases
from P1 to P2
P2
P1
D2
D1
0
Q1
Q2 Quantity (Q)
5 Steps to Graphing Heaven
Step 5- Answer questions 5 (both parts)
Price (P)
S
5. What happens to
quantity?
Quantity increases
from Q1 to Q2
P2
P1
D2
D1
0
Q1
Q2 Quantity (Q)
Determinants of Demand and Supply
11. Determinants of Demand: Reasons for
Change/ Shift in Demand (SEPTIC) A
change in:
Price of Substitutes- things that replace each other:
pork v. beef, pinto beans vs. black beans, TV shows
and video rentals (If P of Substitute ↑, D for other
good ↑) (If P of A ↑, D for B ↑).
Consumer Expectations-if they expect a change in prices
or their income
Determinants of Demand and Supply
11. Determinants of Demand: Reasons for
Change/ Shift in Demand (SEPTIC) A
change in:
Population: Number of consumers, more or less
people
Consumer Taste- preferences, styles, fads, fashion, health,
advertising, popularity
Determinants of Demand and Supply
11. Determinants of Demand: Reasons for
Change/ Shift in Demand (SEPTIC) A
change in:
Income (y) (If Y ↑ , D ↑. If Y↓, D↓) Steak, Sports
Car
Price of Complements- things that go together: ketchup
and fries; movies and popcorn, cars and gasoline (If P of
Complement ↑, D for other good ↓) (If P of A ↑, D for B
↓).
Determinants of Demand and Supply
12. Determinants of Supply: Reasons for
Change/ Shift in Supply (GETNoCredit)
A change in:
Government Policies - taxes, regulations,tariffs, quotas,
setting prices, or any other government action.
Expectations- businesses expect a change to occur to sales,
profits, etc.
Determinants of Demand and Supply
12. Determinants of Supply: Reasons for
Change/ Shift in Supply (GETNoCredit)
A change in:
Technology- increases the efficiency of your natural, human,
capital, and entrepreneurship resources.
Number of Suppliers- Companies entering or leaving the
market.
Determinants of Demand and Supply
12. Determinants of Supply: Reasons for
Change/ Shift in Supply (GETNoCredit)
A change in:
Costs of Production- anything that increases or decreases the
cost of your land , labor, capital, and entrepreneurship.