2Do Now: Reading QuizDefine the following terms complements, inferior good, normal good, substitutes.The text lists six main factors that shift the demand curve. List 3.The text lists six main factors that shift the supply curve. List 3.If the supply of a good increases which way does the supply curve shift?If the demand of a good decreases which way does the demand curve shift?
3Review from Last ClassComplements – two goods that go together. When the price of one goes up the demand of the other goes down.i.e. Hot Dogs and Mustard, Gas and CarsInferior Good – a good that people demand less of when their income increases.i.e. Low quality products (disposable razors example)Normal Good – a good that people demand more of when their income increases.New clothing, new car, new phone, new computer, new video gameSubstitutes – two goods that compete with each other. When the price of one good goes up, the quantity demanded of the other also goes up.i.e. coke and pepsi
4Factors that Shift Demand Consumer IncomeEmployment and Unemployment ratesPrice of SubstitutePrice of ComplementPopulation (of buyers)Market SizeTastesFuture Price ExpectationsWhat buyers expect the future prices of the good will be
5How to Illustrate the Shift in Demand When demand increases, at any given price people want to buy more of the good. The demand curve shifts outward and to the rightWhen demand decreases, at any given price people want to buy less of the good. The demand curve shifts inward to the left
6Factors that Shift Supply TechnologyPrice of Inputs (inputs are things used to produce the goods)Number of FirmsPrice of Substitute ProductsPrice of Joint ProductsFuture Price Expectations
7How to Illustrate the Shift in Supply An event that increases supply causes the supply curve to shift outward and to the rightAn event that decreases supply causes the supply curve to shift inward and to the left
8Would the demand curve or supply curve shift? MarketEventWould the demand curve or supply curve shift?Would the curve shift to the right or left?wheatA drought destroys much of the crop.SupplyLeftredwood lumberEnvironmentalists urge consumers to boycott redwood products.cigarsA new study shows that smoking cigars results in lots of wrinkles.butterThe price of margarine goes up.paperThe price of wood pulp rises.Hula hoopsBrad Pitt confides to People magazine that "he gets a big kick out of his hula hoop."yachtsThe average price of stocks falls by over 20% between now and the end of the year.gasolineLarge sports-utility vehicles (like Suburbans and Expeditions) become more popular.umbrellasHeavy rain is forecast.tofuE. Coli bacteria is found in another meat plant.Two oil supertankers collide.hamburgerThe price of hamburger rises.orangesThere's an early frost which destroys much of the crop.applesA new pesticide is developed which controls tent caterpillars.grapesThe National Marines Fisheries Service bans pesticide spraying within 1,000 feet of waterways containing coho salmon.wineThe average wage of grape harvesters rises by 10%.U.S. carsThe U.S. imposes a tariff on Japanese car imports.hospital bedsScientists discover a pill that cures cancer.cementA 7.9 earthquake hits San Francisco.Video rentalsThe price of getting cable TV goes up.windshieldsA new law is passed requiring gravel trucks to cover their loads with tarps.Taxi serviceLocal subway workers go on strikeBike helmetsThe price of bicycles goes downLucerne milkThe price of Safeway milk goes down.jellybeansThe price of jellybeans goes up.Oreo cookiesThe price of milk increases.Burger King whoppersMcDonald's lowers the price of Big Macs.Hot dogs60 Minutes does an expose called "The Truth about Hot Dogs."Mad Cow Disease wipes out a lot of dairy cows.candlesAn electric company official announces that a computer bug will likely result in power outages.
9Do Later: HomeworkFind a current events article that talks about supply and demand. Come to class with a ½ page summary on the article and be prepared to discuss in class.