Who can label this?

SUPPLY AND DEMAND SHIFTS Price Quantity Price Quantity

I. Demand Use the table below to draw 1. Draw the demand curve here: the demand curve: Pizza Demand Schedule PriceQuantity $.508 $1.007 $1.505 $2.002 $2.501 Price Quantity

11. Fill in the direction of quantity: PriceQuantity As the price goes up… Quantity goes: As the price goes down… Quantity goes: Summary: Consumers want (more/fewer) goods and services at higher prices than they do at lower prices.

2. Fill in the direction of quantity: PriceQuantity As the price goes up… Quantity goes: As the price goes down… Quantity goes: Summary: People buy (more/fewer) goods and services at higher prices than they do at lower prices.

Consider this: If there was an increase in demand for CDs what would that mean? If there was an decrease in demand for CDs what would that mean?

II. Demand Shifts=when the curve moves! Demand IncreaseDemand Decrease Price Quantity D1 D2 Quantity Price D1D2 The less you buy the more you will move to the left! If you get confused, think of a number line.

What direction and why? 3. When demand increased, what direction did the curve shift? 4. When demand decreased, what direction did the curve shift? D1

6 Factors Shifting Demand 1. Number of Consumers= how many people live in a certain area 5.Who has more consumers, Raleigh or Northampton?

2. Consumer Disposable Income=income left over after you buy necessary items 6. Quick Review: What is the name of the tax we put on these “extra” goods? 7. What is consumer disposable income?

3. Consumer Tastes=popularity of the product 4. Consumer Expectations=wh at consumers expect to happen in the future

5.Substitutes=comp eting products that can be exchanged if the price of one increases Substitute of hamburgers: Substitute of cars:

6. Complementary Goods=products that are used together Complement of peanut butter: Complement of French fries:

Demand Shift Practice Try it on your own!! 10 minutes to complete in groups, then correct as a class

If US Gov’t gave citizens a tax credit ($$$) then people would have more money to spend (more disposable income). Would demand increase or decrease? Demand FactorIncrease or Decrease?

DVD players have become popular among consumers. What happened to demand for DVDs? Demand FactorIncrease or Decrease?

Consumers expect that a new version of the iPod will come out around Christmas. What happened to demand for the OLD iPod? Demand FactorIncrease or Decrease?

Demand Factors Dell raised the price of its laptops, so consumers started to buy the lower priced Sony laptop. What happened to demand for Dell laptops? Demand FactorIncrease or Decrease?

A new housing development was built in Enfield. Did the number of consumers in Enfield increase or decrease? So what happened to demand? Demand FactorIncrease or Decrease?

Consumers who used to prefer board games now prefer video games. What happened to demand for board games? Demand FactorIncrease or Decrease?

III. Supply 10. Draw the supply curve here: Pizza Supply Schedule PriceQuantity $.501 $1.002 $1.505 $2.007 $2.508 Use the table below to draw the supply curve:

11. Fill in the direction of quantity: PriceQuantity As the price goes up… Quantity goes: As the price goes down… Quantity goes: Summary: Producers make (more/fewer) goods and services at higher prices than they do at lower prices.

IV. Supply Shifts Supply Increase Supply Decrease Price Quantity S1 S2 Quantity Price S2 S1

What direction and why? 12. When supply increased, what direction did the curve shift? 13. When supply decreased, what direction did the curve shift? S1

14. Predict: If it becomes cheaper to make something (like an iPod)…the cost of production goes down…what do you think would happen to the quantity supplied?

5 Factors Shifting Supply 1.Number of Suppliers=more businesses making a good=more supply of the good 2. Government Regulations=tighter government regulations (control) make it more expensive to make goods  supply decreases. 15. What are some examples of government regulations?

3. Taxes=Higher taxes raise business costs  if a business has to pay more money to the gov’t, it has less to spend on factors of production  so supply decreases. 16. Illustrate how taxes work.

4. Subsidies=gov’t money given to businesses, people, or a group to help them out (reduces the cost of production) 5. Producer Expectations=if producers think that consumer demand is going to drop, they will reduce supply; if they think demand will increase, they will increase supply. 17. What are some other examples of subsidies? 23. If tape makers expect people to want CDs, what happens to supply? Why?

Supply Shift Practice

Congress gave all corn producers a subsidy for each bushel of corn they produce. Did the cost of corn production go up or down? Did the supply of corn increase or decrease? Supply FactorIncrease or Decrease?

Congress raised the minimum wage from $6.55 an hour to $7.25. What is the impact for fast food restaurants? Did the supply of fast food increase or decrease? Supply FactorIncrease or Decrease?

Congress cut the tax on American corporations to try and boost production in the United States. Did costs for corporations go up or down? Did supply increase or decrease? Supply FactorIncrease or Decrease?

A new shopping plaza opened on Highway. Did the # of suppliers increase or decrease? Did supply increase or decrease? Supply FactorIncrease or Decrease?

As the weather gets warmer near the end of the school year clothing stores expect consumers will want to buy summer clothes. Did the supply of winter clothes increase or decrease? Did the supply of SUMMER clothes increase or decrease? Supply FactorIncrease or Decrease?

Supply Shift Practice 3. QUICK REVIEW: What is the point called when supply and demand are equal?

Shift Scenarios 1. ScenarioWhat changes? Increase or Decrease? Because of a booming economy there was a rise in disposable incomes

1. ScenarioWhat changes? Increase or Decrease? Congress just voted to raise taxes on corporations to pay for entitlement programs

2. ScenarioWhat changes ? Increase or Decrease? The price of coffee is rising causing people to want to drink more tea instead, b/c tea is cheaper

2. ScenarioWhat changes? Increase or Decrease? Congress just passed a bill giving all cotton producers $2 for every bushel of cotton produced

5. ScenarioWhat changes? Increase or Decrease? The popularity of beanie babies has declined as consumers decide to purchase higher technology toys

5. ScenarioWhat changes? Increase or Decrease? Producers think that demand is going to drop for Regular TVs when all TVs go to Hi-Def.

6. ScenarioWhat changes? Increase or Decrease? The popularity of iPods has led to consumer demand for iPod speakers and iTrip

ScenarioWhat changes? Increase or Decrease? The number of consumers in Halifax County grew when an apartment complex was built

ScenarioWhat changes? Increase or Decrease? Consumers expect that a new more fuel efficient SUV will come out and so they stop buying normal SUVs

Draw Supply and Demand Together and Label Graph

2. Graph the change in equilibrium, price, and quantity for each scenario (changing supply OR demand OR both). Pay attention to what is changing!

SUPPLY increase, Demand no change Price _______ Quantity _______

SUPPLY decrease, Demand no change Price _______ Quantity _______

DEMAND increase, Supply no change Price _______ Quantity _______

DEMAND decrease, Supply no change Price _______ Quantity _______

SUPPLY increase, DEMAND increase Price _______ Quantity _______

SUPPLY increase, DEMAND decrease Price _______ Quantity _______

SUPPLY decrease, DEMAND decrease Price _______ Quantity _______

SUPPLY decrease, DEMAND increase Price _______ Quantity _______