Download Shift in the Demand Curve

Being an Economically Smart Citizen
I. Understanding Your Role in the Economy
A. The U.S. has a ____________Economy
1. most economic decisions made by individuals
looking out for _________________________.
a. ____________ gov’t interference
2. is ____________
a. the ____________ you make as a
consumer affects the products made and
prices you pay for them.
b. vice-versa, the products and prices
____________ affects your ___________.
p. 1
Being an Economically Smart Citizen
3. is based on ____________
a. system in which citizens own most of the
means of production.
4. is based on ____________ ____________
a. businesses compete for profit
B. ____________ try to persuade people to make
certain economic actions.
C. ____________ forces businesses to produce quality
products at low prices.
p. 2
Being an Economically Smart Citizen
D. Role of gov’t
1. helps maintain ____________ markets.
2. provide ____________ private sector doesn’t.
3. use incentives to ____________ and
____________
people and businesses to take
certain action.
II. Making Wise Choices
A. ____________ Choice
1. choosing the ____________ that has the
greatest value from a group of like-products.
a. generates the ____________ value for a
given expenditure.
p. 3
Economic Resources
I. Producing ____________ and ____________
A. Economic ____________ includes goods and services.
B. Four Factors of Production
1. ____________ resources.
a. gifts of nature
2. ____________ resources
a. labor (nation’s workforce)
3. ____________(goods)
a. tools, machinery, and buildings used to make
other products.
4. ____________
a. individuals who start businesses,
introduce new products, and improve
management techniques.
p. 4
Supply
and
Demand
p. 5
The Law of Demand
• The law of demand holds that other things
equal, as the price of a good or service
____________, its quantity demanded
____________.
– The reverse is also true: as the price of a good or
service ____________, its quantity demanded
____________.
© p. 6
Demand Curve
The demand curve has a ____________ slope,
consistent with the law of demand.
p. 7
The Law of Supply
• The law of supply holds that other things equal,
as the price of a good ____________, its
quantity supplied will ____________, and vice
versa.
• Why do producers produce more output when
prices rise?
– They seek ________________________
– They can cover ____________marginal costs of
production
p. 8
Supply Curve
The supply curve has a ____________slope, consistent
with the law of supply.
p. 9
Equilibrium
• In economics, an equilibrium is a situation in
which:
– there is no inherent tendency to ____________,
– quantity demanded ____________ quantity
supplied
p. 10
Equilibrium
Equilibrium occurs at a price of $ ____ and a quantity
of ______units.
p. 11
Shortages and Surpluses
• A shortage occurs when quantity
____________ exceeds quantity supplied.
– A shortage implies the market price is too
____________ .
• A surplus occurs when quantity ____________
exceeds quantity demanded.
– A surplus implies the market price is too
____________ .
p. 12
Shift in the Demand Curve
• A change in any ____________ other than price
that influences quantity demanded produces a
shift in the demand curve or a change in demand.
• Factors that shift the demand curve include:
–
–
–
–
____________ ____________
Population change
____________ ____________
Prices of related goods:
• ____________ : goods consumed in place of one another
• ____________ : goods consumed jointly
p. 13
Shift in the Demand Curve
This demand curve has shifted to the ____________ .
Quantity demanded is now higher at any given price.
p. 14
Equilibrium After a Demand Shift
The shift in the demand curve moves the market
equilibrium from point A to point B, resulting in a
____________ price and ____________ quantity.
p. 15
Shift in the Supply Curve
• A change in any variable other than
____________ that influences quantity
supplied produces a shift in the supply curve or
a change in supply.
• Factors that shift the supply curve include:
– Change in input costs
– ________________________
– Change in size of the industry
p. 16
Shift in the Supply Curve
For an given rental price, quantity ____________ is now
lower than before.
p. 17
Equilibrium After a Supply Shift
The shift in the supply curve moves the market equilibrium from
point A to point B, resulting in a ____________ price and
____________ quantity.
p. 18
Price Ceilings & Floors
• A price ceiling is a legal ____________ that
can be charged for a good.
– Results in a ____________ of a product
– Common examples include apartment rentals and
credit cards interest rates.
• A price floor is a legal ____________ that can
be charged for a good.
– Results in a ____________ of a product
– Common examples include soybeans, milk,
____________ ____________
p. 19
Price Ceiling
A price ceiling is set at $2 resulting in a
____________ of 20 units.
p. 20
Price Floor
A price floor is set at $4 resulting in a
____________ of 20 units.
p. 21