Transcript PowerPoint:Shifting Supply and Demand

Increases and Decreases in
Supply and Demand
Mr. Raposo
Monday, October 5, 2009
Agenda




Increase/decrease in supply
Increase/decrease in demand
HW Chapter 2 quiz tomorrow
Begin Facebook theorist project
(groups of 3 or 4)
The Equilibrium Market for Blu-ray
Players
(thousands)
An Increase in the Supply of Blu-ray
Players
Surplus of 100
3
300
(thousands)
S2
An Increase in the Supply of Blu-ray
Players

An increase in the supply of Blu-ray players
causes the supply curve to shift to the right.
The shift from S1 to S2 causes a temporary
surplus (of 100 blu-ray’s). As a result, price
falls until a new equilibrium point of supply
and demand is reached. The new
equilibrium price is $300 and 300 blu-ray
players ( a fall in price by $100 and a rise in
quantity by 50 blu-ray players).
A Decrease in the Supply of blu-ray’s
Players
S0
5
Shortage of 100
200
(thousands)
A Decrease in the Supply of Blu-ray Players



An decrease in the supply of blu-ray players
causes the supply curve to shift to the left.
The shift from S1 to S0 causes a temporary
shortage (of 100 blu-ray’s).
As a result, price rises until a new
equilibrium point of supply and demand is
reached. The new equilibrium price is $500
and 200 blu-ray players.
Price has increased by $100 and quantity
has fallen by 50 Blu-ray players
An Increase in the Demand for blu-ray
Players
5
D2
Shortage of 100
300
(thousands)
An Increase in the Demand for blu-ray
Players



An increase in the demand for blu-ray
players causes the demand curve to shift to
the right.
The shift from D1 to D2 causes a temporary
shortage (of 100 blu-ray’s). As a result,
price rises until a new equilibrium point of
supply and demand is reached. The new
equilibrium price is $500 and 300 blu-ray’s
D players.
Price has increased by $100 and quantity
has fallen by 50 blu-ray’s players
A Decrease in the Demand for blu-ray
Players
Surplus of 100
3
D0
200
(thousands)
A decrease in the Demand for blu-ray Players


A decrease in the demand for blu-ray
players causes the demand curve to shift to
the left. The shift from D1 to D0 causes a
temporary surplus (of 100 Blu-ray). As a
result, price falls until a new equilibrium
point of supply and demand is reached. The
new equilibrium price is $300 and 200 bluray players.
Price has decreased by $100 and quantity
has fallen by 50 blu-ray players
Summary
Ceteris Paribus…….
 Increase in supply causes a decrease in price
and an increase in quantity
 Decrease in supply causes an increase in
price and an decrease in quantity
 Increase in demand causes an increase in
price and an increase in quantity
 Decrease in demand causes an decrease in
price and an decrease in quantity
Summary
Effect
Price (P)
Quantity (Q)
Demand (D)
Supply (S)
Increase in
Supply
Decrease
Increase
Unchanged
Increase Right
Decrease in
Supply
Increase
Decrease
Unchanged
Decrease Left
Increase in
Demand
Increase
Increase
Increase Right
Unchanged
Decrease in
Demand
Decrease
Decrease
Decrease Left
Unchanged