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Supply & demand pe student notes
- 1. Unit #2 SUPPLY & DEMAND
- 5. Demand Curve for Movie Tickets $10 8 0 Number of Movie Tickets per Month Price of Movie Tickets 1 1 2 3 4 5 6 7 8 9 2 3 4 5 6 7 A B
- 8. Change in Quantity Demanded Quantity Price D $10 $5 20 10
- 9. Change in Quantity Demanded Quantity Price D $10 $5 20 10
- 10. Change in Quantity Demanded Quantity Price D $10 $5 20 10
- 13. Increase in Demand Quantity Demanded Price
- 14. Increase in Demand Quantity Demanded Price D 1
- 15. Increase in Demand Quantity Demanded Price D 1
- 16. Increase in Demand –Curve Shift to the Right Quantity Demanded Price D 1 D 2
- 17. Decrease in Demand Quantity Demanded Price
- 18. Decrease in Demand Quantity Demanded Price D 1
- 19. Decrease in Demand Quantity Demanded Price D 1
- 20. Decrease in Demand - Curve Shift to Left Quantity Demanded Price D 2 D 1
- 27. Supply Schedule for Painting Services
- 28. Supply Curve for Painting Services $200 5 0 Rooms Painted per Week Price per Room 1 20 40 60 80 100 120 140 160 180 2 3 4
- 33. Increase in Supply Quantity Supplied Price S 1
- 34. Increase in Supply – Curve Shift to the Right Quantity Supplied Price S 1 S 2
- 35. Decrease in Supply Quantity Supplied Price S 1
- 36. Decrease in Supply – Curve Shift to the Left Quantity Supplied Price S 1 S 1
- 44. Market Equilibrium Price 0 Quantity
- 45. Market Equilibrium Price S D 0 Quantity
- 46. Market Equilibrium Price S D A Q 1 0 P 1 Quantity
- 47. Market Equilibrium Price S D A Equilibrium Q 1 0 P 1 Quantity
- 48. Market Equilibrium Price S D A Equilibrium Q 1 0 P 1 Equilibrium Price Quantity
- 49. Market Equilibrium Equilibrium Quantity Price S D A Equilibrium Q 1 0 P 1 Quantity Equilibrium Price The equilibrium price is also known as the “market-clearing” price. At this price, both consumers and producers are satisfied.
- 51. An Increase in Demand Quantity Price 0 P 1 Q 1 A S 1 D 1
- 52. An Increase in Demand Quantity Price 0 P 1 Q 1 A ( Original Market Equilibrium ) S 1 D 2 D 1
- 53. An Increase in Demand Quantity Price B 0 P 1 Q 1 A S 1 D 2 D 1
- 54. An Increase in Demand Quantity Price B Q 2 0 P 2 P 1 Q 1 A S 1 D 2 D 1
- 55. An Increase in Demand Quantity Price B( New Market Equilibrium ) Q 2 0 P 2 P 1 Q 1 A S 1 D 2 D 1
- 57. An Increase in Supply Quantity Price A (original market equilibrium) Q 1 0 P 1 D 1 S 1
- 58. An Increase in Supply Quantity Price A Q 1 0 P 1 D 1 S 1 S 2
- 59. An Increase in Supply Quantity Price A Q 1 0 P 1 P 2 Q 2 B (New Market Equilibrium) D 1 S 1 S 2
- 62. Excess Demand Quantity Price S D 0 P 1 Equilibrium Price Equilibrium
- 63. Excess Demand Quantity Price S D A Equilibrium 0 P 1 Equilibrium Price P 0 Price below Equilibrium Price
- 64. Excess Demand Quantity Price S D A Equilibrium 0 P 1 Equilibrium Price P 0 Price below Equilibrium Price Q s 0
- 65. Excess Demand Quantity Price S D A Equilibrium 0 P 1 Equilibrium Price P 0 Price below Equilibrium Price Q s 0 Q d 0
- 66. Surplus explained by Michael Scott
- 68. Excess Supply Quantity Price D Equilibrium 0 P 1 Equilibrium Price S
- 69. Excess Supply Quantity Price D Equilibrium 0 P 2 Price above Equilibrium Price P 1 Equilibrium Price S
- 70. Excess Supply Quantity Price D Equilibrium 0 P 2 Price above Equilibrium Price P 1 Equilibrium Price S Q d 2
- 71. Excess Supply Quantity Price D 0 P 2 Price above Equilibrium Price P 1 Equilibrium Price S Equilibrium Q s 2 Q d 2
Notas del editor
- Most of time we are looking for Market Demand, or the sum of all the individuals quantities demanded in a market Example: Suppose you want to start a TV repair service -set up shop in neighborhood with many TVs & no repair shops -want to set up business in area where demand is greatest willingness means person’s want or desire to purchase & ability is having enough money to pay for the good (need both for demand!) example: Jack doesn’t have $34,000 to buy a specific car, has the willingness but not the money so there is NO demand
- Prices of Related goods – substitutes (apples & oranges, chicken & beef) complements (cars & gas) Preferences: people are beginning to favor small gas-efficient cars so D shifts right while people are favoring other laptops other than Dell recently so their D curve shifts left Complements-Tennis rackets & tennis balls (demand moves in the opposite direction of the price) # of buyers - the more buyers the higher the D, the fewer the buyers the lower the D (higher birthrate, immigration, migration, death rate, or migration)
- Elastic ex. – T-Bone steaks are elastic b/c $6 a pound compared to $3.50 a pound is going to cause a huge change in QtD (designer clothing / luxury items) Elastic curves – more horizontal Inelastic curves – more vertical Inelastic – higher or lower price on salt will not change Qtd greatly (ex. Toothpaste) Elastic - when quantity demanded is greater than percentage change in price Inelastic-when quantity demanded is less than percentage than price Unit elastic- when Qd changes by the same % as price
- 1. Tobacco is inelastic b/c addictive & insulin needed for diabetic no matter what
- Once again, dealing with Market Supply, or sum of all the individual quantities supplied Supply example: supply of TVs is the number of sets manufacturers are likely to produce at $700, $500, $300, or any other price Supply: economists think about people’s ability & willingness to offer products for sale over a wide range of prices Supplier-offer economic product for sale
- Based on idea of trying to maximize revenues, or profits as a business
- Cost of inputs – in T-shirt, supply may have increased because of a decline in the cost of such inputs as cotton or ink = if price of inputs goes down, producer can produce more T-shirts at each and every price Prod. – more T-shirts can be produced in a production period = supply increases, if workers are unhappy/unmotivated, untrained supply decreases Technology- introduce new machine, chemical/industrial process can lower cost of production, so when costs are down producers are willing to produce more at each & every price in the market (supply down if technology breaks down) Subsidies – government payments to individuals, businesses, or other groups to encourage or protect a certain type of economic activity have opposite effect & supply increases (ex. Farmers historically receive subsidies to offset costs of production)
- Government Regulations ex. Government mandates safety features to automobiles like emission controls, stronger bumpers, & air bags which increases production cost of car Natural Disaster/Crisis – somolian pirates slowing African shipping
- Elastic – kites & candy because not much needed to increase production (therefore if prices rise they can increase output quickly) Inelastic – oil (need lots of machinery, capital, labor to increase production so it is inelastic), banana plantations Elasticity is influenced by availability of inputs, mobility of inputs, storage capacity, & time needed to adjust to price change
- E price is also market-clearing price – market is cleared of all surpluses & shortages E is like the point reached on a balance scale when each side holds an object of equal mass When supply matches demand, both consumers & producers come away satisfied (even though producers would like higher prices & consumers lower prices)
- At farmer’s market, no farmer goes home with leftover melons, and no consumer leaves empty handed at $5.00 a melonn
- New video game or movie release = too many consumers! Shortage in real world – have a playoff high school football game that stadium seats 2,000 people but 2,500 people want to come to game (shortage) Price rises b/c buyers will offer to buy products at higher prices so they get the products, higher pices will also motivate sellers to produce more output
- Surplus = clearance rack in any store Surplus in real world – high school football playoff has stadium for 2,000 seats but only 500 people attend (surplus of seats) Price falls because suppliers cannot sell all of their products & want to get rid of inventories (storing extra goods is costly) & produce less output