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Transcript
• 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