20Changes in demand vs. changes in quantity demanded Changes in quantity demanded only caused by changes in the products own price, a movement along a demand curveChanges in demand--a shift in the demand curve caused by factors other than the price of the product
21PPP1P2D1DDQ1Q2QQA change in demandA change in quantitydemanded
22Do you really understand????? Do you understand?Do you really understand?????
23Which of the following would increase the current demand for cd’s? a A decrease in the price of cd’sA decline in the teenage populationA lower cost for producing cd’sAn expectation of a drop in cd pricesA decrease in the price of cd playersThe correct answer is…….E
241. According to the "Law of Demand," as the price of a good increases a. the demand for the good increases.b. the demand for the good decreases.c. the quantity demanded increases.d. the quantity demanded decreases.2. Tea and Coffee are ____________. Peanutbutter and jelly are ____________.a. complements; substitutesb. complements; complementsc. substitutes; complementsd. substitutes; substitutes
253. Which of the following will increase the demand for pencils? a. a decrease in the priceb. a decrease in the student populationc. a decrease in the price of pensd. a decrease in the price of erasers
26The supply side of the market Supply refers to willingness and ability to produce something
27As price rises, the quantity supplied rises, cet. par. The Law of SupplyAs price rises, the quantity supplied rises, cet. par.
28Reasons for the Law of Supply? Monetary incentivesThe Law of Increasing Opportunity Costs
41Changes in supply vs. changes in quantity supplied Changes in quantity supplied only caused by changes in the products own price, a movement along a supply curveChanges in supply--a shift in the supply curve caused by factors other than the price of the product
42SPS1SPP2P1Q1Q2QQA change in supplyA change in quantitysupplied
43Supply and demand together Put supply and demand curves on the same graphIntersection gives the equilibrium price and quantity
44PE and QE represent the equilibrium price and quantity
60If both curves shift, can predict price or quantity, but not both unless the magnitude of the shifts are known
61Examples: shifts in both S and D curves Say both S and D increase, what can we say about equilibrium P and Q?
62Q will increase, but P is indeterminate ANSWERQ will increase, but P is indeterminate
63Examples: shifts in both S and D curves Say S increases but D decreases, what can we say about equilibrium P and Q?
64P will decrease, but Q is indeterminate ANSWER:P will decrease, but Q is indeterminate
65What assumption is always made when the price changes? What is a Demand Curve?What is a Supply Curve?What is equilibrium Price?What are shortages and surpluses?What happens when demand and supply curves shift?
66Supply and demand problems Suppose apples and oranges are substitutes to consumers: Bad weather destroys many apple orchards--what happens to equilibrium price and quantity in the apple market? In the Orange market?? Illustrate graphically.
68Oprah Winfrey says on tv that she will never eat another hamburger Oprah Winfrey says on tv that she will never eat another hamburger. What might happen to the equilibrium price and quantity in the beef market? Show graphically with supply and demand curves.
69Decrease in demand in the beef market, price and quantity fall 69
70The demand for computers has clearly increased over time, due to higher incomes and changing preferences towards computers. Despite the increased demand, the price of computers has continued to fall. Show graphically with supply and demand curves how this could happen, and give some possible explanations.
71SS1P2P1P3D1DIf supply increases more than demand, price falls--greater supply due possibly to lower input costs, better technology, more firms
72An increase in the wages paid to fishermen will have what effect on the fish market equilibrium? a. Price will decrease, and quantity will decrease.b. Price will increase, and quantity will increase.c. Price will decrease, and quantity will increase.d. Price will increase, and quantity will decrease.e. Price and quantity will stay the same.
73Over the past couple of years, prices for personal computers have fallen dramatically, but suppliers have offered more and more of them for sale. Does this refute the law of supply? Explain.