Transcript LESSON 6.2 Shifts of Demand and Supply Curves

6.2 Shifts of Demand
and Supply Curves
Objectives
 Explain how a shift of the demand curve
affects equilibrium price and quantity.
 Explain how a shift of the supply curve
affects equilibrium price and quantity.
 Explain what happens to equilibrium price
and quantity if both curves shift.
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6.2 Shifts of Demand
and Supply Curves
Key Terms
 increase in demand
 decrease in demand
 increase in supply
 decrease in supply
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6.2 Shifts of Demand and Supply Curves
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Shifts of the Demand Curve
A shift of the demand curve means that
quantity demanded changes at each price.
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6.2 Shifts of Demand and Supply Curves
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What Could Shift the Demand Curve?
An increase in the money income of
consumers
An increase in the price of a substitute
A change in expectations
A growth in the population of consumers
A change in consumer tastes
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6.2 Shifts of Demand and Supply Curves
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An Increase in Demand
An increase in demand means that
consumers are now more willing and able
to buy the product at every price.
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6.2 Shifts of Demand and Supply Curves
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Effects of an Increase in Demand
Figure 6.2
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6.2 Shifts of Demand and Supply Curves
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A Decrease in Demand
A decrease in demand means that
consumers are less willing and able to buy
the product at every price.
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6.2 Shifts of Demand and Supply Curves
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Effects of an Decrease in Demand
Figure 6.3
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6.2 Shifts of Demand and Supply Curves
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Summary of Demand Shifts
If the demand curve shifts rightward, price
and quantity increase.
If the demand curve shifts leftward, price
and quantity decrease.
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6.2 Shifts of Demand and Supply Curves
SLIDE
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Shifts of the Supply Curve
A shift of the supply curve means that
quantity supplied changes at each price.
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6.2 Shifts of Demand and Supply Curves
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What Could Shift the Supply Curve?
A reduction in the price of a resource
A decline in the price of another good
these resources could make
A technological breakthrough
A change in expectations
An increase in the number of producers
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6.2 Shifts of Demand and Supply Curves
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An Increase in Supply
An increase in supply means that
producers are more willing and able to
supply pizza at every price.
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6.2 Shifts of Demand and Supply Curves
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Effects of an Increase in Supply
Figure 6.4
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6.2 Shifts of Demand and Supply Curves
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A Decrease in Supply
A decrease in supply means that
producers are less willing and able to
supply the product at every price.
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6.2 Shifts of Demand and Supply Curves
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Effects of a Decrease in Supply
Figure 6.5
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6.2 Shifts of Demand and Supply Curves
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Summary of Supply Shifts
If the supply curve shifts rightward, price
decreases but quantity increases.
If supply shifts leftward, price increases
but quantity decreases.
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6.2 Shifts of Demand and Supply Curves
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Both Curves Shift
Curves shift in the same direction
Equilibrium quantity will increase.
What happens to price depends on which
curve shifts more.
Curves shift in opposite directions
Equilibrium price will increase if demand
increases and supply decreases.
Equilibrium price will decrease if demand
decreases and supply increases.
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6.2 Shifts of Demand and Supply Curves
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Change in Demand
Change in Supply
Increases
Decreases
Equilibrium price change
is indeterminate.
Equilibrium price falls.
Equilibrium quantity
increases.
Equilibrium quantity
change is indeterminate.
Equilibrium price rises.
Equilibrium price change
is indeterminate.
Equilibrium quantity
change is indeterminate.
Equilibrium quantity
decreases.
Figure 6.6
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