Transcript 5 Steps to Graphing Heaven

5 Steps to Graphing Heaven
Price (P)
Step 1- Draw the starting S and D Graph
A. Draw the axes
S
B. Label the axes
C. Draw the curves
D. Label the curves
P0
E. Find the
intersection
D
0
Q0
Quantity (Q)
F. Label the
starting price (P0)
and quantity (Q0)
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? Preferences!
1. Which determinant of supply or demand is affected? Refer to #14 & 15 on your notes!
Demand Determinants (EEPPIICS)
1.
Expected Future prices
2.
Expected Future Income
3.
Population
4.
Preferences
5.
Income for Normal Goods
6.
Income for Inferior Goods
7.
Complements
8.
Substitutes
Supply Determinants (FoRRENT)
1.
Cost of Factors of Production
2.
Related Goods- Substitutes in Production
3.
Related Goods- Complements in Production
4.
Expectations
5.
Technology
6.
Number of Suppliers
7.
Technology
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 D0 to D1
5 Steps to Graphing Heaven
Step 3- Draw the shift and label everything
Price (P)
S
P1
P0
D1
D0
0
Q0
Q1 Quantity (Q)
5 Steps to Graphing Heaven
Step 4- Answer question 4
Price (P)
S
P1
4. Movement along
which curve?
∆Qs; Movement
along the S curve.
P0
D1
D0
0
Q0
Q1 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 P0 to P1.
P1
P0
D1
D0
0
Q0
Q1 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 Q0 to Q1.
P1
P0
D1
D0
0
Q0
Q1 Quantity (Q)
42. Determinants of Demand and Supply

A. Determinants of Demand: Reasons for
Change/Shift in Demand (EEPPIICS) A
change in(∆):
Expected future prices by consumers- if they expect a
change in prices to happen in the future or if a prediction
is made about the future.
Expected future income by consumers- if they expect
a change their income to happen in the future or if a
prediction is made about the future.

A. Determinants of Demand: Reasons
for Change/Shift in Demand
(EEPPIICS) A change in(∆):
Population: Number of consumers
Preferences/Tastes- fads, fashion, new
technology, etc.

A. Determinants of Demand: Reasons
for Change/Shift in Demand
(EEPPIICS) A change in(∆):
Income (y) for Normal goods (If Y ↑ , D ↑. If
Y↓, D↓) Steak, Sports Car
Income (y) for Inferior goods (If Y ↑ , D ↓. If
Y ↓, D ↑) Hamburger, Top Ramen,
Subcompact

A. Determinants of Demand: Reasons for
Change/Shift in Demand (EEPPIICS) A
change in(∆):
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
↓).
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 ↑).
42. Determinants of Demand and Supply

B. Determinants of Supply: Reasons for
change/Shift in Supply (FoR RENT) A
change in(∆):
cost of Factors of Production- Acts of Nature; fire,
flood, hurricane, drought, etc. or events outside the
control of the business, i.e. war, strikes, government
taxes/ regulations.
prices of Related goods/ substitutes in production (If
Price of Substitute ↑, S of good ↓), soccer balls v.
volleyballs
B. Determinants of Supply: Reasons
for change/Shift in Supply
(FoR RENT) A change in(∆):

prices of Related goods/ complements in
production (If P of Complement ↑, S of good
↑), copper and turquoise (a byproduct of
copper production)
Expected future price or income- IT
DEPENDS!
B. Determinants of Supply: Reasons
for change/Shift in Supply
(FoR RENT) A change in(∆):

Number of suppliers in the market- More
companies enter a market when lots of profit is
being made and vice versa.
Technology- More tech leads to more
efficiency.