+ supply & demand. + ceteris paribus latin phrase that means “all other things remain the...
DESCRIPTION
+ Finding equilibriumTRANSCRIPT
+
Supply & Demand
+Ceteris paribus
Latin phrase that means “all other things remain the same”
What causes supply and demand to change?
+Finding equilibrium
+Determinants of demand Cause a change in demand
Will affect the equilibrium price and/or equilibrium quantity
+1. Change in consumers’ income Examples?
+2. Change in consumers’ preferences Examples?
+3. Change in the prices of related goods/services
Complements: things that go together—hot dogs and buns, cars and gasoline
Substitutes: Coke versus Pepsi, Pizza Hut versus Dominos, Wendy’s versus McDonalds
+4. Change in the number of consumers in a market Examples?
+5. Change in expectation of buyers Examples?
+Market survey: Demand for shoesPrice Before After$100 0 5$90 5 10$80 10 15$70 15 20$60 20 30
Graph the two demand curves from the data below:
+
+Determinants of demand Cause a change in demand Change in demand results from a change in…
1. Consumers’ incomes2. Consumers’ preferences 3. Prices of related goods or services (complements or
substitutes) 4. Number of consumers in a market 5. Expectations of buyers
Will affect the equilibrium price and/or equilibrium quantity
+Determinants of supply Cause a change in supply Change in supply results from a change in…
1. Price of resources used to make good/service2. Technology used to make the good/service3. Number of sellers in the market4. Expectations of producers 5. Natural disasters & international events6. Government actions
Will affect the equilibrium price and/or equilibrium quantity
+1. Change in price of resources Examples?
+
Examples?
2. Change in technology
+3. Change in number of sellers Examples?
+4. Expectations of producers Examples?
+5. Natural disasters & other events
+6. Government actions • Subsidy • Excise Tax
+Market survey: Supply of babysitters
Price Before After$20 30 11$15 20 9$12 15 7$8 10 5$5 5 2
Graph the two demand curves from the data below:
+
+Determinants of supply Cause a change in supply Change in supply results from a change in…
1. Price of resources used to make good/service2. Technology used to make the good/service3. Number of sellers in the market4. Expectations of producers 5. Natural disasters & international events6. Government actions
Will affect the equilibrium price and/or equilibrium quantity