Transcript Shifts in Supply and Demand

Shifts in Supply and
Demand
Today’s LEQ: How do
markets operate? (continued
from yesterday)
First, Let’s Review Demand…


Demand = the total
amount consumers
are willing and able to
buy at all prices.
Demand Curve = the
graphical
representation of
what consumers are
willing and able to
buy.
 Law
of Demand: As price
increases (decreases), quantity
demanded decreases (increases).
P
Q
P
Q
Next, Let’s Review Supply…


Supply = the total
amount of a good or
service producers are
able to make at all
prices
Supply curve = the
graphical
representation of a
good or service
producers are able to
make at all prices.
 Law
of Supply: as price
increases (decreases) quantity
supplied increases (decreases)
P
Q
P
Q
Today’s Warm Up
Answer in your notes & be ready to
share:
 Imagine the equilibrium price for a can of
tuna is $2.00. Bumblebee Tuna sets their
price at $3.00 a can. Will this result in a
shortage or surplus of tuna? How do
you know?
 Be sure to graphically represent your
answer.

Shifts in Supply and Demand


Some factors cause
supply and demand
to shift; represented
by the movement of
the entire curve
Changes in QS or QD
are represented by
movement along the
corresponding
curve
Factors that cause demand to
change or shift
Tastes and fads
 Income
 Number of buyers
 Future price expectations
 Price and availability of:
Substitutes (i.e. Coke and Pepsi)
Compliments (i.e. peanut butter and
jelly)

Activity 1: Think, Pair, Coach

Person A – complete side A
 Explain
your answer to Person B
 Person B will say “Yes, that’s correct! Great job!”…
Or, they will explain what you did wrong

Person B – Complete side B
 Explain
your answer to Person A
 Person A will say “Yes, that’s correct! Great job!”…
Or, they will explain what you did wrong

Alternate until all questions have been
completed.
Factors that cause a change in
supply:
 Price
of land, labor or capital (factors
of production)
 Technology
 Number of other sellers
 Price of other goods I could produce
 Tax policy
Activity 2: Think, Pair, Coach

Person A – complete side A
 Explain
your answer to Person B
 Person B will say “Yes, that’s correct! Great job!”…
Or, they will explain what you did wrong

Person B – Complete side B
 Explain
your answer to Person A
 Person A will say “Yes, that’s correct! Great job!”…
Or, they will explain what you did wrong

Alternate until all questions have been
completed.
IRDL the Turtle 
“IRDL” will help
you!
 INCREASE =
RIGHT
 DECREASE =
LEFT