S&D: Demand Shifts What is the equilibrium price?

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Presentation transcript:

S&D: Demand Shifts What is the equilibrium price? If the quantity demanded is 32, is there a shortage or a surplus? If the price is $15 is there a shortage or a surplus? Refer to Figure 6.1, the graph on Equilibrium in the Pizza Market, on p. 165.

Remember: Determinants of Demand Change in real income Normal goods Inferior goods Change in price of substitutes or complements Change in consumer expectations Growth in population Change in consumer tastes

Demand Shifts for Pizza EQ price? Price for hamburgers increases, what will happen to the demand for pizzas? New EQ price? Refer to Figure 4.6, the graph on An Increase in the Market Demand for Pizza, on p.119.

How demand shifts affect PRICE If increase in D = Price will increase If decrease in D = Price will decrease Price changes at all quantities.

If the price of airline tickets increase, what will happen to the demand for hotel rooms? What will happen to the price of hotel rooms?