Chapter 4: The Market Forces of Supply and Demand 1

2 DEMAND TABLE 1 (text, page 71) Variables That Influence Buyers A.) Movement along the demand curve Price of the Good Itself

Chapter 4: The Market Forces of Supply and Demand 3 DEMAND TABLE 1 (text, page 71) Variables That Influence Buyers A.) Movement along the demand curve Price of the Good Itself B.) "Shifts" the demand curve Income Prices of Related Goods Tastes Expectations Number of Buyers

Demand 4 DEMAND TABLE 1 (text, page 71) Variables That Influence Buyers A.) Movement along the demand curve Price of the Good Itself B.) "Shifts" the demand curve Income Prices of Related Goods Tastes Expectations Number of Buyers D2D2 D1D1 D3D3 Price Quantity Increase in demand Decrease in demand Fig. 3 (p. 70)

Demand: How to Decrease Smoking? (Fig. 4, page 72) “Warnings” versus “Taxes” 5 DEMAND TABLE 1 (text, page 71) Variables That Influence Buyers A.) Movement along the demand curve Price of the Good Itself B.) "Shifts" the demand curve Income Prices of Related Goods Tastes Expectations Number of Buyers D1D1 D2D2 Decrease in demand Fig. 4.a. (p. 72) A “warnings on the package” policy tries to discourage smoking by shifting the demand curve to the left. Price of Cigarettes per Pack Number of Cigarettes Smoked per Day

Demand: How to Decrease Smoking? (Fig. 4, page 72) “Warnings” versus “Taxes” 6 DEMAND TABLE 1 (text, page 71) Variables That Influence Buyers A.) Movement along the demand curve Price of the Good Itself B.) "Shifts" the demand curve Income Prices of Related Goods Tastes Expectations Number of Buyers D1D1 Price of Cigarettes per Pack Number of Cigarettes Smoked per Day Decrease in demand Fig. 4.b. (p. 72) A “tax” on cigarettes tries to discourage smoking by movement left along the demand curve.

Supply 7 SUPPLY TABLE 2 (text, page 76) Variables That Influence Sellers A.) Movement along the supply curve Price of the Good Itself B.) "Shifts" the supply curve Input prices Technology Expectations Number of Sellers S2S2 S1S1 Price Quantity Increase in supply Decrease in supply Fig. 7 (p. 75) S3S3

Chapter 4: The Market Forces of Supply and Demand 8 DEMAND TABLE 1 (text, page 71) Variables That Influence Buyers A.) Movement along the demand curve Price of the Good Itself B.) "Shifts" the demand curve Income Prices of Related Goods Tastes Expectations Number of Buyers SUPPLY TABLE 2 (text, page 76) Variables That Influence Sellers A.) Movement along the supply curve Price of the Good Itself B.) "Shifts" the supply curve Input prices Technology Expectations Number of Sellers

Equilibrium 9 Demand Price Quantity Equilibrium Fig. 8 (p. 77) Supply Equilibrium Quantity Equilibrium Price

Markets NOT in Equilibrium (Figure 9, page 78) 10 Demand Price Quantity Fig. 9. a. Excess Supply Supply Quantity demanded Surplus Quantity supplied

Markets NOT in Equilibrium (Figure 9, page 78) 11 Demand Price Quantity Fig. 9. b. Excess Demand Supply Quantity supplied Quantity demanded Shortage

Fig. 10, page 80: New Equilibrium for an Upward Shift in Demand 12 D1 Price Quantity New Equilibrium Supply New Equilibrium Quantity is Higher New Equilibrium Price is Higher D2 Increase in demand

13 Demand Price Quantity New Equilibrium S1 New Equilibrium Quantity is Lower New Equilibrium Price is Higher Fig. 11, page 81: New Equilibrium for a Downward Shift in Supply Decrease in supply S2