Selling Quantity Price Demanded$ 3$ 2$ 1$ 41025406015$ 5

PriceQuantity$6$5$4$3$2$11020304050600DemandDownsloping left-Plot the pointsGraphing:-Connect the dotsto rightDemand

The demand by all the consumers of a given good or service.

Substitution effect The change in the quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods that are substitutes.Income effect The change in the quantity demanded of a good that results from the effect of a change in the goods price on consumers purchasing power.

Selling Quantity Price Old New0$ 3$ 2$ 0$ 1$ 41$ 634652$ 51346527013452DecIncCaused by a Change in a DeterminantMovement OF the curve

PriceQuantity$6$5$4$3$2$11234560OldIncrease in Demand shifts out or to the rightDecrease in Demand shifts in or to the left

1Why the curve shifts2345Consumer IncomesPrice of Other GoodsConsumer TastesNumber of ConsumersConsumer Expectations

1Consumer Incomes+tax cuts increase net incomesConsumers have more money to spend, demand increases-the $ depreciates against the EuroImported goods from Europe cost more dollars, demand decreasesFor Normal Goods!!!For Normal Goods!!!Or why the curve shifts

-the $ depreciates against the EuroDomestic travel looks better, demand increasesFor Inferior GoodsConsumers switch to better goods, demand for Hot Dogs decreases +tax cuts increase net incomes

2Price of Other GoodsIf airlines cut ticket pricesMore demand for Luggage Less demand for train tickets

Tickets and Luggage are compliments Airlines and Trains are SubstitutesIf ticket prices decrease, demand for Luggage increasesIf ticket prices increase, demand for Luggage decreasesIf air tickets increase, demand for Train tickets also increasesCompliments are consumed or used together (inverse relationship)Substitutes replace each other (direct relationship)

3Consumer Tastes-beanie hats make a comebackDemand increases-Hula Hoops go out of styleDemand decreases

4Number of Consumers(also Demographics)-Hurricanes around Labor DayFewer tourists touring Florida and the Gulf Coast, demand decreasesMore tourists touring, NC and SC, demand increases

5Consumer Expectations-dealers reduce car prices in AugustCar buyers wait, demand decreases-heavy rains have damaged coffee cropConsumers expect shortages and higher prices so they buy more now, demand increases

1Why the curve shifts2345Consumer IncomesPrice of Other GoodsConsumer TastesNumber of ConsumersConsumer Expectations

Consumers responding to a Change in the Price of the goodCaused by factors related to production of the goodHarder or costlier to produce, price goes upMovement ALONG the curveQuantity$6$5$4$3$2$11234560DemandSupply CurveCurrent PricePriceP QP QdecreaseincreaseEasier or less expensive to produce, price goes downWhat makes the Supply Curve Shift??P1P2P3Q2Q1Q3The Supply Schedule!!What makes the Supply Curve Shift??

A Change in Demand versus a Change in Quantity DemandedPrice falls from $700 to $600, then movement along the demand curve from A to Ban increase in quantity demanded from 3 million tablets to 4 million tablets. If consumers incomes increase, the demand curve will shift to the rightan increase in demand.In this case, the increase in demand from D1 to D2 causes the quantity of tablet computers demanded at a price of $700 to increase from 3 million tablets at point A to 5 million tablets at point C.

Selling Quantity Price Supplied$ 3$ 2$ 1$ 46025151040$ 5

PriceQuantity$6$5$4$3$2$11020304050600Upsloping right-Plot the pointsGraphing:-Connect the dotsto leftSupply

Selling Quantity Supplied Price Old New6$ 3$ 2$ 1$ 45$ 63214$ 5754236431052DecIncCaused by a Change in a DeterminantMovement OF the curve

PriceQuantity$6$5$4$3$2$11234560OldIncrease in Supply shifts out or to the rightDecrease in Supply shifts in or to the left

1Resource PricesWhy the curve shifts2Changes in Technology3Prices of other goodsTaxes and Subsidies64Number of ProducersProducer Expectations5

1Resource Prices-gas is discovered under CVCCSupply increases-Minimum wage goes upSupply decreasesOr why the curve shifts

2Changes in Technology+ If a more powerful computer is developedMakes production easier (and cheaper)- If stronger pollution controls are requiredMakes production harder (and costly)

3Prices of other goodsShift resources away from high production cost goods.Caused by natural disasters or market price of other goods

4Number of Producers-fewer firms decrease supply+more firms increase supply

5Producer Expectations-if prices are expected to increase, more productionabout prices and resource availability-if prices are expected to decrease, less production

+ subsidies encourage productionTaxes and Subsidies- taxes discourage production6

Response to a Change in the Price of the goodCaused by factors related to consumersMovement ALONG the curveQuantity$6$5$4$3$2$11234560SupplyCurrent PricePriceP1P2P3Q2Q1Q3

1Resource PricesWhy the curve shifts2Changes in Technology3Prices of other goodsTaxes and Subsidies64Number of ProducersProducer Expectations5

A Change in Supply versus a Change in Quantity SuppliedIf price rises from $500 to $600, there will be movement up the supply curve from point A to point Ban increase in quantity supplied by Apple, Toshiba, Samsung, and the other firms from 5 million to 6 million tablets.If the price of an input decreases, that causes sellers to supply more of the product at every price, the supply curve will shift to the rightan increase in supply.In this case, the increase in supply from S1 to S2 causes the quantity of tablet computers supplied at a price of $600 to increase from 6 million at point B to 8 million at point C.

Selling Quantity Price Demanded Supplied$ 3$ 2$ 1$ 41025406015$ 56025151040$ 32525

PriceQuantity$6$5$4$3$2$11020304050600D-Plot DemandGraphing:-Plot SupplyDSS

Quantity$6$5$4$3$2$11234560DemandCurrent EquilibriumPriceP QP QdecreaseincreaseP1P2P3Q2Q1Q3SupplyCaused by a change in a Determinant of SupplyShifting the Supply Curve

Quantity$6$5$4$3$2$11234560SupplyCurrent EquilibriumPriceP1P2P3Q3Q1Q2Caused by a change in a Determinant of DemandShifting the Demand CurvedecreaseincreaseDemandP QP Q

1Why the curve shifts2345Consumer IncomesPrice of Other GoodsConsumer TastesNumber of ConsumersConsumer Expectations

1Resource PricesWhy the curve shifts2Changes in Technology3Prices of other goodsTaxes and Subsidies64Number of ProducersProducer Expectations5

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