SlideShare a Scribd company logo
1 of 12
Changes in Both
Demand and Supply
3
A
Shifts in Supply and Demand
• We just learned that the supply and the
demand curve can shift based on changes
in non-price factors.
• Supply shifts
– Generally caused by factors that change production
costs
• Demand shifts
– Generally caused by factors that change our
willingness to pay for goods
Shifts in Supply and Demand
• The world is complex and shifts don’t
always occur in a simple, one-at-a-time
manner.
• What happens if there is a shift in supply
AND a shift in demand?
Shifts in Supply and Demand:
Example
• Consider the market for salmon, and suppose
two things happen simultaneously:
1. A major drought hits the northwest United States
2. A medical journal reports that people who consume
salmon live longer than people who eat other fish
• These two events will respectively lead to:
1. A decrease in the supply of salmon
2. An increase in the demand for salmon
Shifts in Supply and Demand:
Example
• By itself, decrease in supply leads to
– Higher equilibrium price
– Lower equilibrium quantity
• By itself, increase in demand leads to
– Higher equilibrium price
– Higher equilibrium quantity
• Combined effects?
– Higher equilibrium price
– Equilibrium quantity???
Graphical Analysis
Graphical Analysis
Graphical Analysis
Graphs of Shifts
Change Illustration
Impact on price and
quantity
Demand and supply
both increase
The demand and supply
curves shift to the right.
The shifts reinforce each
other with respect to
quantity, but act as
countervailing forces along
the price axis.
Demand and supply
both decrease
The demand and supply
curves shift to the left. The
shifts reinforce each other
with respect to quantity,
but act as countervailing
forces along the price axis.
Graphs of Shifts
Change Illustration
Impact on price and
quantity
Demand increases
and supply decreases
The demand curve shifts to
the right and the supply
curve shifts to the left. The
shifts reinforce each other
with respect to price, but
act as countervailing forces
along the quantity axis.
Demand decreases
and supply increases
The demand curve shifts to
the left and the supply
curve shifts to the right. The
shifts reinforce each other
with respect to price, but
act as countervailing forces
along the quantity axis.
Shorthand Summary of Shifts
• D→ : P↑Q↑
• D← : P↓Q↓
• S→ : P↓Q↑
• S← : P↑Q↓
• D→ & S→ : P(↑↓ or ↔)Q↑
• D← & S← : P(↑↓ or ↔)Q↓
• D→ & S← : P↑Q(↑↓ or ↔)
• D← & S→ : P↓Q(↑↓ or ↔)
Notation: ↔ means “stays the same”
Shift Summary
• Don’t memorize the previous slide!
• A better idea:
1. Figure out what shift(s) will occur as a
result of some economic event.
2. Draw the correct shift(s).
3. Examine what you just graphed.

More Related Content

What's hot

Market and Demand
Market and DemandMarket and Demand
Market and Demanditutor
 
Demand And Supply Analysis
Demand And Supply AnalysisDemand And Supply Analysis
Demand And Supply Analysismandalina landy
 
Illustration of non price determinants.
Illustration of non price determinants.Illustration of non price determinants.
Illustration of non price determinants.Faith Martin
 
Supply and Demand
Supply and DemandSupply and Demand
Supply and DemandCASE
 
Unit #2 student notes
Unit #2 student notesUnit #2 student notes
Unit #2 student notesNick Allgyer
 
Unit 2 lesson 2 presentation
Unit 2 lesson 2 presentationUnit 2 lesson 2 presentation
Unit 2 lesson 2 presentationDerek D'Angelo
 
Pe supply & demand student
Pe supply & demand studentPe supply & demand student
Pe supply & demand studentNick Allgyer
 
Basic of Supply and Demand - Economic
Basic of Supply and Demand - EconomicBasic of Supply and Demand - Economic
Basic of Supply and Demand - EconomicAbdullah Kareem
 
Economic equilibrium
Economic equilibriumEconomic equilibrium
Economic equilibriumHome
 
Demand & supply iimm
Demand & supply iimmDemand & supply iimm
Demand & supply iimmishwarijoshi
 
Supply Demand and Equilibrium
Supply Demand and EquilibriumSupply Demand and Equilibrium
Supply Demand and EquilibriumAbdullah Kareem
 
Market Determinants (Lecture)
Market Determinants (Lecture)Market Determinants (Lecture)
Market Determinants (Lecture)Matthew West
 
Managment - theory of demand and supply
Managment - theory of demand and supplyManagment - theory of demand and supply
Managment - theory of demand and supplyBhargav Panchal
 
Business Economics 03 Demand, Supply and the Market
Business Economics 03 Demand, Supply and the MarketBusiness Economics 03 Demand, Supply and the Market
Business Economics 03 Demand, Supply and the MarketUttam Satapathy
 
Market equilibrium and application of demand and supply theory
Market equilibrium and application of demand and supply theoryMarket equilibrium and application of demand and supply theory
Market equilibrium and application of demand and supply theoryOnline
 

What's hot (20)

Market and Demand
Market and DemandMarket and Demand
Market and Demand
 
Demand And Supply Analysis
Demand And Supply AnalysisDemand And Supply Analysis
Demand And Supply Analysis
 
Illustration of non price determinants.
Illustration of non price determinants.Illustration of non price determinants.
Illustration of non price determinants.
 
Supply and Demand
Supply and DemandSupply and Demand
Supply and Demand
 
demand and supply analysis
demand and supply analysisdemand and supply analysis
demand and supply analysis
 
laws of demand and supply
laws of demand and supplylaws of demand and supply
laws of demand and supply
 
Unit #2 student notes
Unit #2 student notesUnit #2 student notes
Unit #2 student notes
 
Pfs assignment 3
Pfs assignment 3Pfs assignment 3
Pfs assignment 3
 
Unit 2 lesson 2 presentation
Unit 2 lesson 2 presentationUnit 2 lesson 2 presentation
Unit 2 lesson 2 presentation
 
Pe supply & demand student
Pe supply & demand studentPe supply & demand student
Pe supply & demand student
 
Basic of Supply and Demand - Economic
Basic of Supply and Demand - EconomicBasic of Supply and Demand - Economic
Basic of Supply and Demand - Economic
 
Economic equilibrium
Economic equilibriumEconomic equilibrium
Economic equilibrium
 
Demand & supply iimm
Demand & supply iimmDemand & supply iimm
Demand & supply iimm
 
Demand and supply
Demand and supplyDemand and supply
Demand and supply
 
Supply Demand and Equilibrium
Supply Demand and EquilibriumSupply Demand and Equilibrium
Supply Demand and Equilibrium
 
LAW OF SUPPLY AND DEMAND
LAW OF SUPPLY AND DEMANDLAW OF SUPPLY AND DEMAND
LAW OF SUPPLY AND DEMAND
 
Market Determinants (Lecture)
Market Determinants (Lecture)Market Determinants (Lecture)
Market Determinants (Lecture)
 
Managment - theory of demand and supply
Managment - theory of demand and supplyManagment - theory of demand and supply
Managment - theory of demand and supply
 
Business Economics 03 Demand, Supply and the Market
Business Economics 03 Demand, Supply and the MarketBusiness Economics 03 Demand, Supply and the Market
Business Economics 03 Demand, Supply and the Market
 
Market equilibrium and application of demand and supply theory
Market equilibrium and application of demand and supply theoryMarket equilibrium and application of demand and supply theory
Market equilibrium and application of demand and supply theory
 

Similar to Prinecomi lectureppt ch03_appendix

Module 2 Demand Analysis (1).pptx
Module 2 Demand Analysis (1).pptxModule 2 Demand Analysis (1).pptx
Module 2 Demand Analysis (1).pptxNallabothulakruthi
 
Strategic AIrline Management 2. traffic
Strategic AIrline Management 2. trafficStrategic AIrline Management 2. traffic
Strategic AIrline Management 2. trafficNarudh Cheramakara
 
Law of.Supply
Law of.SupplyLaw of.Supply
Law of.SupplyMir Haris
 
demand and supply, a free market, equilibrium in market
demand and supply, a free market, equilibrium in marketdemand and supply, a free market, equilibrium in market
demand and supply, a free market, equilibrium in marketRAHUL SINHA
 
Supply curve shift with constant demnd curve
Supply curve shift with constant demnd curveSupply curve shift with constant demnd curve
Supply curve shift with constant demnd curvebridgefire
 
demandsupplyandequilibrium-160710114855.pptx
demandsupplyandequilibrium-160710114855.pptxdemandsupplyandequilibrium-160710114855.pptx
demandsupplyandequilibrium-160710114855.pptxsadiqfarhan2
 
2 demand
2 demand2 demand
2 demandghayal
 
Lecture 3 understanding demand
Lecture 3 understanding demandLecture 3 understanding demand
Lecture 3 understanding demandMohammed Shefin
 
Economics unit 3 2
Economics unit 3 2Economics unit 3 2
Economics unit 3 2ajdredla
 
Economics unit 3 2
Economics unit 3 2Economics unit 3 2
Economics unit 3 2ajdredla
 
Determinants Of Demand
Determinants Of DemandDeterminants Of Demand
Determinants Of DemandVijay A Raj
 
Attachments 2012 08_9
Attachments 2012 08_9Attachments 2012 08_9
Attachments 2012 08_9mitalikataria
 
market forces Economics micro macro economics
market forces Economics micro macro economicsmarket forces Economics micro macro economics
market forces Economics micro macro economicsAasthacelinLakra123
 
Prinecomi lectureppt ch03
Prinecomi lectureppt ch03Prinecomi lectureppt ch03
Prinecomi lectureppt ch03rsvanwassenhove
 
DEMAND AND ELASTICITY OF DEMAND.pptx
DEMAND AND ELASTICITY OF DEMAND.pptxDEMAND AND ELASTICITY OF DEMAND.pptx
DEMAND AND ELASTICITY OF DEMAND.pptxArjavJain69
 

Similar to Prinecomi lectureppt ch03_appendix (20)

Module 2 Demand Analysis (1).pptx
Module 2 Demand Analysis (1).pptxModule 2 Demand Analysis (1).pptx
Module 2 Demand Analysis (1).pptx
 
Strategic AIrline Management 2. traffic
Strategic AIrline Management 2. trafficStrategic AIrline Management 2. traffic
Strategic AIrline Management 2. traffic
 
Law of.Supply
Law of.SupplyLaw of.Supply
Law of.Supply
 
demand and supply, a free market, equilibrium in market
demand and supply, a free market, equilibrium in marketdemand and supply, a free market, equilibrium in market
demand and supply, a free market, equilibrium in market
 
Supply curve shift with constant demnd curve
Supply curve shift with constant demnd curveSupply curve shift with constant demnd curve
Supply curve shift with constant demnd curve
 
demandsupplyandequilibrium-160710114855.pptx
demandsupplyandequilibrium-160710114855.pptxdemandsupplyandequilibrium-160710114855.pptx
demandsupplyandequilibrium-160710114855.pptx
 
2 demand
2 demand2 demand
2 demand
 
Lecture 3 understanding demand
Lecture 3 understanding demandLecture 3 understanding demand
Lecture 3 understanding demand
 
Elasticity
Elasticity Elasticity
Elasticity
 
Economics unit 3 2
Economics unit 3 2Economics unit 3 2
Economics unit 3 2
 
Economics unit 3 2
Economics unit 3 2Economics unit 3 2
Economics unit 3 2
 
Determinants Of Demand
Determinants Of DemandDeterminants Of Demand
Determinants Of Demand
 
Attachments 2012 08_9
Attachments 2012 08_9Attachments 2012 08_9
Attachments 2012 08_9
 
market forces Economics micro macro economics
market forces Economics micro macro economicsmarket forces Economics micro macro economics
market forces Economics micro macro economics
 
law of supply
law of supplylaw of supply
law of supply
 
Unit 2 supply.ppt
Unit 2 supply.pptUnit 2 supply.ppt
Unit 2 supply.ppt
 
Prinecomi lectureppt ch03
Prinecomi lectureppt ch03Prinecomi lectureppt ch03
Prinecomi lectureppt ch03
 
Microeconomics
Microeconomics Microeconomics
Microeconomics
 
DEMAND AND ELASTICITY OF DEMAND.pptx
DEMAND AND ELASTICITY OF DEMAND.pptxDEMAND AND ELASTICITY OF DEMAND.pptx
DEMAND AND ELASTICITY OF DEMAND.pptx
 
Lecture2
Lecture2Lecture2
Lecture2
 

More from rsvanwassenhove

Prinecomi lectureppt ch05
Prinecomi lectureppt ch05Prinecomi lectureppt ch05
Prinecomi lectureppt ch05rsvanwassenhove
 
Prinecomi lectureppt ch04
Prinecomi lectureppt ch04Prinecomi lectureppt ch04
Prinecomi lectureppt ch04rsvanwassenhove
 
Prinecomi lectureppt ch02
Prinecomi lectureppt ch02Prinecomi lectureppt ch02
Prinecomi lectureppt ch02rsvanwassenhove
 
Prinecomi lectureppt ch01
Prinecomi lectureppt ch01Prinecomi lectureppt ch01
Prinecomi lectureppt ch01rsvanwassenhove
 
Prinecomi lectureppt ch15
Prinecomi lectureppt ch15Prinecomi lectureppt ch15
Prinecomi lectureppt ch15rsvanwassenhove
 
Prinecomi lectureppt ch14
Prinecomi lectureppt ch14Prinecomi lectureppt ch14
Prinecomi lectureppt ch14rsvanwassenhove
 
Prinecomi lectureppt ch13_a
Prinecomi lectureppt ch13_aPrinecomi lectureppt ch13_a
Prinecomi lectureppt ch13_arsvanwassenhove
 
Prinecomi lectureppt ch13
Prinecomi lectureppt ch13Prinecomi lectureppt ch13
Prinecomi lectureppt ch13rsvanwassenhove
 
Prinecomi lectureppt ch12
Prinecomi lectureppt ch12Prinecomi lectureppt ch12
Prinecomi lectureppt ch12rsvanwassenhove
 
Prinecomi lectureppt ch11
Prinecomi lectureppt ch11Prinecomi lectureppt ch11
Prinecomi lectureppt ch11rsvanwassenhove
 
Prinecomi lectureppt ch10
Prinecomi lectureppt ch10Prinecomi lectureppt ch10
Prinecomi lectureppt ch10rsvanwassenhove
 
Prinecomi lectureppt ch08
Prinecomi lectureppt ch08Prinecomi lectureppt ch08
Prinecomi lectureppt ch08rsvanwassenhove
 
Prinecomi lectureppt ch07
Prinecomi lectureppt ch07Prinecomi lectureppt ch07
Prinecomi lectureppt ch07rsvanwassenhove
 
Prinecomi lectureppt ch06
Prinecomi lectureppt ch06Prinecomi lectureppt ch06
Prinecomi lectureppt ch06rsvanwassenhove
 
Prinecomi lectureppt ch09
Prinecomi lectureppt ch09Prinecomi lectureppt ch09
Prinecomi lectureppt ch09rsvanwassenhove
 

More from rsvanwassenhove (15)

Prinecomi lectureppt ch05
Prinecomi lectureppt ch05Prinecomi lectureppt ch05
Prinecomi lectureppt ch05
 
Prinecomi lectureppt ch04
Prinecomi lectureppt ch04Prinecomi lectureppt ch04
Prinecomi lectureppt ch04
 
Prinecomi lectureppt ch02
Prinecomi lectureppt ch02Prinecomi lectureppt ch02
Prinecomi lectureppt ch02
 
Prinecomi lectureppt ch01
Prinecomi lectureppt ch01Prinecomi lectureppt ch01
Prinecomi lectureppt ch01
 
Prinecomi lectureppt ch15
Prinecomi lectureppt ch15Prinecomi lectureppt ch15
Prinecomi lectureppt ch15
 
Prinecomi lectureppt ch14
Prinecomi lectureppt ch14Prinecomi lectureppt ch14
Prinecomi lectureppt ch14
 
Prinecomi lectureppt ch13_a
Prinecomi lectureppt ch13_aPrinecomi lectureppt ch13_a
Prinecomi lectureppt ch13_a
 
Prinecomi lectureppt ch13
Prinecomi lectureppt ch13Prinecomi lectureppt ch13
Prinecomi lectureppt ch13
 
Prinecomi lectureppt ch12
Prinecomi lectureppt ch12Prinecomi lectureppt ch12
Prinecomi lectureppt ch12
 
Prinecomi lectureppt ch11
Prinecomi lectureppt ch11Prinecomi lectureppt ch11
Prinecomi lectureppt ch11
 
Prinecomi lectureppt ch10
Prinecomi lectureppt ch10Prinecomi lectureppt ch10
Prinecomi lectureppt ch10
 
Prinecomi lectureppt ch08
Prinecomi lectureppt ch08Prinecomi lectureppt ch08
Prinecomi lectureppt ch08
 
Prinecomi lectureppt ch07
Prinecomi lectureppt ch07Prinecomi lectureppt ch07
Prinecomi lectureppt ch07
 
Prinecomi lectureppt ch06
Prinecomi lectureppt ch06Prinecomi lectureppt ch06
Prinecomi lectureppt ch06
 
Prinecomi lectureppt ch09
Prinecomi lectureppt ch09Prinecomi lectureppt ch09
Prinecomi lectureppt ch09
 

Recently uploaded

How to Create and Manage Wizard in Odoo 17
How to Create and Manage Wizard in Odoo 17How to Create and Manage Wizard in Odoo 17
How to Create and Manage Wizard in Odoo 17Celine George
 
Explore beautiful and ugly buildings. Mathematics helps us create beautiful d...
Explore beautiful and ugly buildings. Mathematics helps us create beautiful d...Explore beautiful and ugly buildings. Mathematics helps us create beautiful d...
Explore beautiful and ugly buildings. Mathematics helps us create beautiful d...christianmathematics
 
ICT Role in 21st Century Education & its Challenges.pptx
ICT Role in 21st Century Education & its Challenges.pptxICT Role in 21st Century Education & its Challenges.pptx
ICT Role in 21st Century Education & its Challenges.pptxAreebaZafar22
 
PROCESS RECORDING FORMAT.docx
PROCESS      RECORDING        FORMAT.docxPROCESS      RECORDING        FORMAT.docx
PROCESS RECORDING FORMAT.docxPoojaSen20
 
Activity 01 - Artificial Culture (1).pdf
Activity 01 - Artificial Culture (1).pdfActivity 01 - Artificial Culture (1).pdf
Activity 01 - Artificial Culture (1).pdfciinovamais
 
Understanding Accommodations and Modifications
Understanding  Accommodations and ModificationsUnderstanding  Accommodations and Modifications
Understanding Accommodations and ModificationsMJDuyan
 
1029-Danh muc Sach Giao Khoa khoi 6.pdf
1029-Danh muc Sach Giao Khoa khoi  6.pdf1029-Danh muc Sach Giao Khoa khoi  6.pdf
1029-Danh muc Sach Giao Khoa khoi 6.pdfQucHHunhnh
 
Python Notes for mca i year students osmania university.docx
Python Notes for mca i year students osmania university.docxPython Notes for mca i year students osmania university.docx
Python Notes for mca i year students osmania university.docxRamakrishna Reddy Bijjam
 
Third Battle of Panipat detailed notes.pptx
Third Battle of Panipat detailed notes.pptxThird Battle of Panipat detailed notes.pptx
Third Battle of Panipat detailed notes.pptxAmita Gupta
 
psychiatric nursing HISTORY COLLECTION .docx
psychiatric  nursing HISTORY  COLLECTION  .docxpsychiatric  nursing HISTORY  COLLECTION  .docx
psychiatric nursing HISTORY COLLECTION .docxPoojaSen20
 
This PowerPoint helps students to consider the concept of infinity.
This PowerPoint helps students to consider the concept of infinity.This PowerPoint helps students to consider the concept of infinity.
This PowerPoint helps students to consider the concept of infinity.christianmathematics
 
Introduction to Nonprofit Accounting: The Basics
Introduction to Nonprofit Accounting: The BasicsIntroduction to Nonprofit Accounting: The Basics
Introduction to Nonprofit Accounting: The BasicsTechSoup
 
Dyslexia AI Workshop for Slideshare.pptx
Dyslexia AI Workshop for Slideshare.pptxDyslexia AI Workshop for Slideshare.pptx
Dyslexia AI Workshop for Slideshare.pptxcallscotland1987
 
How to Manage Global Discount in Odoo 17 POS
How to Manage Global Discount in Odoo 17 POSHow to Manage Global Discount in Odoo 17 POS
How to Manage Global Discount in Odoo 17 POSCeline George
 
Unit-V; Pricing (Pharma Marketing Management).pptx
Unit-V; Pricing (Pharma Marketing Management).pptxUnit-V; Pricing (Pharma Marketing Management).pptx
Unit-V; Pricing (Pharma Marketing Management).pptxVishalSingh1417
 
UGC NET Paper 1 Mathematical Reasoning & Aptitude.pdf
UGC NET Paper 1 Mathematical Reasoning & Aptitude.pdfUGC NET Paper 1 Mathematical Reasoning & Aptitude.pdf
UGC NET Paper 1 Mathematical Reasoning & Aptitude.pdfNirmal Dwivedi
 
Spellings Wk 3 English CAPS CARES Please Practise
Spellings Wk 3 English CAPS CARES Please PractiseSpellings Wk 3 English CAPS CARES Please Practise
Spellings Wk 3 English CAPS CARES Please PractiseAnaAcapella
 
How to Give a Domain for a Field in Odoo 17
How to Give a Domain for a Field in Odoo 17How to Give a Domain for a Field in Odoo 17
How to Give a Domain for a Field in Odoo 17Celine George
 
On National Teacher Day, meet the 2024-25 Kenan Fellows
On National Teacher Day, meet the 2024-25 Kenan FellowsOn National Teacher Day, meet the 2024-25 Kenan Fellows
On National Teacher Day, meet the 2024-25 Kenan FellowsMebane Rash
 

Recently uploaded (20)

Asian American Pacific Islander Month DDSD 2024.pptx
Asian American Pacific Islander Month DDSD 2024.pptxAsian American Pacific Islander Month DDSD 2024.pptx
Asian American Pacific Islander Month DDSD 2024.pptx
 
How to Create and Manage Wizard in Odoo 17
How to Create and Manage Wizard in Odoo 17How to Create and Manage Wizard in Odoo 17
How to Create and Manage Wizard in Odoo 17
 
Explore beautiful and ugly buildings. Mathematics helps us create beautiful d...
Explore beautiful and ugly buildings. Mathematics helps us create beautiful d...Explore beautiful and ugly buildings. Mathematics helps us create beautiful d...
Explore beautiful and ugly buildings. Mathematics helps us create beautiful d...
 
ICT Role in 21st Century Education & its Challenges.pptx
ICT Role in 21st Century Education & its Challenges.pptxICT Role in 21st Century Education & its Challenges.pptx
ICT Role in 21st Century Education & its Challenges.pptx
 
PROCESS RECORDING FORMAT.docx
PROCESS      RECORDING        FORMAT.docxPROCESS      RECORDING        FORMAT.docx
PROCESS RECORDING FORMAT.docx
 
Activity 01 - Artificial Culture (1).pdf
Activity 01 - Artificial Culture (1).pdfActivity 01 - Artificial Culture (1).pdf
Activity 01 - Artificial Culture (1).pdf
 
Understanding Accommodations and Modifications
Understanding  Accommodations and ModificationsUnderstanding  Accommodations and Modifications
Understanding Accommodations and Modifications
 
1029-Danh muc Sach Giao Khoa khoi 6.pdf
1029-Danh muc Sach Giao Khoa khoi  6.pdf1029-Danh muc Sach Giao Khoa khoi  6.pdf
1029-Danh muc Sach Giao Khoa khoi 6.pdf
 
Python Notes for mca i year students osmania university.docx
Python Notes for mca i year students osmania university.docxPython Notes for mca i year students osmania university.docx
Python Notes for mca i year students osmania university.docx
 
Third Battle of Panipat detailed notes.pptx
Third Battle of Panipat detailed notes.pptxThird Battle of Panipat detailed notes.pptx
Third Battle of Panipat detailed notes.pptx
 
psychiatric nursing HISTORY COLLECTION .docx
psychiatric  nursing HISTORY  COLLECTION  .docxpsychiatric  nursing HISTORY  COLLECTION  .docx
psychiatric nursing HISTORY COLLECTION .docx
 
This PowerPoint helps students to consider the concept of infinity.
This PowerPoint helps students to consider the concept of infinity.This PowerPoint helps students to consider the concept of infinity.
This PowerPoint helps students to consider the concept of infinity.
 
Introduction to Nonprofit Accounting: The Basics
Introduction to Nonprofit Accounting: The BasicsIntroduction to Nonprofit Accounting: The Basics
Introduction to Nonprofit Accounting: The Basics
 
Dyslexia AI Workshop for Slideshare.pptx
Dyslexia AI Workshop for Slideshare.pptxDyslexia AI Workshop for Slideshare.pptx
Dyslexia AI Workshop for Slideshare.pptx
 
How to Manage Global Discount in Odoo 17 POS
How to Manage Global Discount in Odoo 17 POSHow to Manage Global Discount in Odoo 17 POS
How to Manage Global Discount in Odoo 17 POS
 
Unit-V; Pricing (Pharma Marketing Management).pptx
Unit-V; Pricing (Pharma Marketing Management).pptxUnit-V; Pricing (Pharma Marketing Management).pptx
Unit-V; Pricing (Pharma Marketing Management).pptx
 
UGC NET Paper 1 Mathematical Reasoning & Aptitude.pdf
UGC NET Paper 1 Mathematical Reasoning & Aptitude.pdfUGC NET Paper 1 Mathematical Reasoning & Aptitude.pdf
UGC NET Paper 1 Mathematical Reasoning & Aptitude.pdf
 
Spellings Wk 3 English CAPS CARES Please Practise
Spellings Wk 3 English CAPS CARES Please PractiseSpellings Wk 3 English CAPS CARES Please Practise
Spellings Wk 3 English CAPS CARES Please Practise
 
How to Give a Domain for a Field in Odoo 17
How to Give a Domain for a Field in Odoo 17How to Give a Domain for a Field in Odoo 17
How to Give a Domain for a Field in Odoo 17
 
On National Teacher Day, meet the 2024-25 Kenan Fellows
On National Teacher Day, meet the 2024-25 Kenan FellowsOn National Teacher Day, meet the 2024-25 Kenan Fellows
On National Teacher Day, meet the 2024-25 Kenan Fellows
 

Prinecomi lectureppt ch03_appendix

  • 1. Changes in Both Demand and Supply 3 A
  • 2. Shifts in Supply and Demand • We just learned that the supply and the demand curve can shift based on changes in non-price factors. • Supply shifts – Generally caused by factors that change production costs • Demand shifts – Generally caused by factors that change our willingness to pay for goods
  • 3. Shifts in Supply and Demand • The world is complex and shifts don’t always occur in a simple, one-at-a-time manner. • What happens if there is a shift in supply AND a shift in demand?
  • 4. Shifts in Supply and Demand: Example • Consider the market for salmon, and suppose two things happen simultaneously: 1. A major drought hits the northwest United States 2. A medical journal reports that people who consume salmon live longer than people who eat other fish • These two events will respectively lead to: 1. A decrease in the supply of salmon 2. An increase in the demand for salmon
  • 5. Shifts in Supply and Demand: Example • By itself, decrease in supply leads to – Higher equilibrium price – Lower equilibrium quantity • By itself, increase in demand leads to – Higher equilibrium price – Higher equilibrium quantity • Combined effects? – Higher equilibrium price – Equilibrium quantity???
  • 9. Graphs of Shifts Change Illustration Impact on price and quantity Demand and supply both increase The demand and supply curves shift to the right. The shifts reinforce each other with respect to quantity, but act as countervailing forces along the price axis. Demand and supply both decrease The demand and supply curves shift to the left. The shifts reinforce each other with respect to quantity, but act as countervailing forces along the price axis.
  • 10. Graphs of Shifts Change Illustration Impact on price and quantity Demand increases and supply decreases The demand curve shifts to the right and the supply curve shifts to the left. The shifts reinforce each other with respect to price, but act as countervailing forces along the quantity axis. Demand decreases and supply increases The demand curve shifts to the left and the supply curve shifts to the right. The shifts reinforce each other with respect to price, but act as countervailing forces along the quantity axis.
  • 11. Shorthand Summary of Shifts • D→ : P↑Q↑ • D← : P↓Q↓ • S→ : P↓Q↑ • S← : P↑Q↓ • D→ & S→ : P(↑↓ or ↔)Q↑ • D← & S← : P(↑↓ or ↔)Q↓ • D→ & S← : P↑Q(↑↓ or ↔) • D← & S→ : P↓Q(↑↓ or ↔) Notation: ↔ means “stays the same”
  • 12. Shift Summary • Don’t memorize the previous slide! • A better idea: 1. Figure out what shift(s) will occur as a result of some economic event. 2. Draw the correct shift(s). 3. Examine what you just graphed.

Editor's Notes

  1. Lecture tip: As with any analysis, the best answer is to graph the problem, and analyze our graph!
  2. Lecture tip: Before revealing bottom two bullets, ask the students what shifts will be caused by the events listed. As with any analysis, the best answer is to graph the problem, and analyze our graph!
  3. Lecture tip: We’ll see that depending on the relative size of the demand and supply shift, the Q* value could increase, decrease, or remain the same.
  4. Lecture notes: The dotted lines show the location of all possible new supply curves that are shifted left from the original supply curve S1.
  5. Lecture notes: The dotted lines show the location of all possible new demand curves that are shifted right from the original demand curve D1.
  6. Lecture notes: All possible intersections of all the possible new S2 and D2 curves are shown in the colored field. The colored field is therefore the possible locations of the new equilibrium P* and Q*. We see that the price (in this case) is always higher, but the quantity could be higher, lower, or the same!
  7. “Beyond the Book Slide” Lecture tip: To prove a point, read through this slide as fast as you can, and hurry and click to the next slide.