Download 1_RULES for shifting

• RULES for shifting
BOTH Supply and Demand
(circle price, underline
products)
#1 > If Price + 1 Product = 1
line = ∆ QD = Price
#2 > If Price + 2 Products = 2
lines = ∆ D = TIMER
#3 > If no Price at all = 2 lines =
∆ D = TIMER
• Ceteris Paribus
•
•
If all things remain
constant. The demand
schedule only takes into
account price changes.
When ONLY the PRICE
changes there is
movement along the
existing curve = a change
in quantity demanded ( ∆
QD).
• Shift Demand
•
When the ceteris
paribus rule is
dropped and other
factors (TIMER) are
considered, the
demand curve will
shift left or right.
– Creates a new line!
• Shifting Demand Curve
– If there is an increase in
demand, the curve will
shift to the right.
• Shifting Demand Curve
• If there is a decrease in
demand, the curve will
shift to the left
•T-I-M-ER
• Non-Price Determinants of
Demand
TASTES & PREFERENCES
(tickle me elmo, furbies)
• Key words: like, love, fashionable,
preferred, voted
• Students at CyFalls High School vote to
have Chik-fil-A for lunch instead of
What-a-Burger. What will happen to
the demand for Chik-fil-A?
INCOME
• Key words: Bonus, gift card, salary,
wages
• The stores in the mall decide to give
their employees a raise. What will
happen to the demand for clothes?
MARKET SIZE
• Key words: immigration, more
students, more housing, population
movement
• A new sub division opens up north of
290. What happens to the demand for
groceries?
EXPECTATIONS OF
CONSUMERS
• Key words: Future outcomes, sales,
ticket purchases, time stamps
• After Thanksgiving TV’s go on sale.
What happens to the demand for TV’s
on black Friday?
RELATED GOODS:
SUBSTITUTES (lobster instead of
steak)
– The news reports that cows in the United
States are infected with Mad Cow disease.
What happens to the demand of chicken?
COMPLIMENTS (peanut butter
and jelly)
– A drought causes this years peanut crop to
decrease drastically. What happens to the
demand for grape jelly?
TASTES & PREFERENCES
(tickle me elmo, furbies)
• Key words: like, love, fashionable,
preferred, voted
• Students at CyFalls High School vote to
have Chik-fil-A for lunch instead of
What-a-Burger. What will happen to
the demand for Chik-fil-A?
INCOME
• Key words: Bonus, gift card, salary,
wages
• The stores in the mall decide to give
their employees a raise. What will
happen to the demand for clothes?
MARKET SIZE
• Key words: immigration, more
students, more housing, population
movement
• A new sub division opens up north of
290. What happens to the demand for
groceries?
EXPECTATIONS OF
CONSUMERS
• Key words: Future outcomes, sales,
ticket purchases, time stamps
• After Thanksgiving TV’s go on sale.
What happens to the demand for TV’s
on black Friday?
RELATED GOODS:
SUBSTITUTES (lobster instead of
steak)
– The news reports that cows in the United
States are infected with Mad Cow disease.
What happens to the demand of chicken?
COMPLIMENTS (peanut butter
and jelly)
– A drought causes this years peanut crop to
decrease drastically. What happens to the
demand for grape jelly?
• Shifting Demand
Other Factors that influence the
demand curve
Other Factors that influence
the Supply curve
• RULES for shifting Supply.
Write this with Demand rules
OR at the bottom of the page.
(circle price, underline
products)
#1 > If Price + 1 Product = 1
line = ∆ QS = Price
#2 > If Price + 2 Products = 2
lines = ∆ S = STONER
#3 > If no Price at all = 2 lines =
∆ S = STONER
•S-T-O-N-E-R
• Non-price determinants for Supply
• S=Subsidy & Taxes
• T=Technology
• O=Other Related products
• N=Number of Sellers
• E=Expectations of Sellers
• R = Resource Price
• STONER
• S=Subsidy & Taxes
– The Government raises/lowers Taxes/Subsidy
• an increase in TAXES or decrease in SUBSIDY
–
= DECREASE supply
• a decrease in TAXES or increase in SUBSIDY
– = INCREASE SUPPLY
• T=Technology
– Ex. A new machine improves production or breaks
• O=Other Related products
– Ex. A company that produces the same product raises
or lowers price (Honda & Toyota)
• N=Number of Sellers
– Ex. A company that makes the same product enters or
leaves the market
• E=Expectations of Sellers
– Ex. Predict the future because of some event in the
market
• Resource Price
– Ex. An input used to make a product goes up or down in
price. Ex. Steel to Cars, flour & sugar to cake mix
• Ceteris Paribus
• If all things remain constant. The
supply schedule only takes into
account price changes.
• When ONLY the PRICE changes there
is movement along the existing curve
= a change in quantity supplied( ∆
QS).
• Shift Supply

When the ceteris paribus
rule is dropped and other
factors (STONER) are
considered, the supply
curve will shift left or right.
◦
Creates a new line!
• Shift Supply
• Increase in Supply = will shift to the
right
• Shift Supply
• Decrease in supply = shift to the left
• S=Subsidy & Taxes
– The Government raises/lowers
Taxes/Subsidy
• an increase in TAXES or
decrease in SUBSIDY
= DECREASE supply
• a decrease in TAXES or
increase in SUBSIDY
= INCREASE SUPPLY
• T=Technology
– Ex. A new machine improves
production or breaks
• O=Other Related products
– Ex. A company that produces
the same product raises or
lowers price (Honda & Toyota)
• N=Number of Sellers
– Ex. A company that makes the same
product enters or leaves the market
• E=Expectations of Sellers
– Ex. Predict the future because of some
event in the market
• Resource Price
– Ex. An input used to make a product goes
up or down in price. Ex. Steel to Cars,
flour & sugar to cake mix
• STONER
• S=Subsidy & Taxes
– The Government raises/lowers Taxes/Subsidy
• an increase in TAXES or decrease in SUBSIDY
–
= DECREASE supply
• a decrease in TAXES or increase in SUBSIDY
– = INCREASE SUPPLY
• T=Technology
– Ex. A new machine improves production or breaks
• O=Other Related products
– Ex. A company that produces the same product raises
or lowers price (Honda & Toyota)
• N=Number of Sellers
– Ex. A company that makes the same product enters or
leaves the market
• E=Expectations of Sellers
– Ex. Predict the future because of some event in the
market
• Resource Price
– Ex. An input used to make a product goes up or down in
price. Ex. Steel to Cars, flour & sugar to cake mix