1. Demand Definitions: Reprise In economics, –A change in quantity demanded occurs when a change in the price of the good itself causes a consumer to buy more or less. –A change in demand occurs when a consumer buys more or less of a good because of a change in some other variable that is not the price of the good itself.

2. Change in Demand Changes in demand are shown by shifting the demand curve. –Increases in demand shift the demand curve to the right. Price Quantity D1D1 D2D2 0

3. Change in Demand Changes in demand are shown by shifting the demand curve. –Decreases in demand shift the demand curve to the left. Price Quantity D1D1 D2D2 0

4. Change in Demand: Causes A change in demand may be caused by any of the following: –A change in the price of a related product. –A change in the buyer’s income. –A change in the buyer’s tastes and preferences. –A change in the number of buyers.

5. A Change in the Price of Related Products: Substitutes A decrease in the price of Y, a substitute for X, causes the demand for X to fall. –A decrease in the price of butter causes some people to buy less margarine, a substitute for butter. The demand curve for margarine shifts to the left. –A decrease in the price of steak causes some people to buy less chicken, a substitute for steak. The demand curve for chicken shifts to the left.

6. A Change in the Price of Related Products: Substitutes An increase in the price of Y, a substitute for X, causes the demand for X to rise. –An increase in the price of butter causes some people to buy more margarine. The demand curve for margarine shifts to the right. –An increase in the price of steak causes some people to buy more chicken. The demand curve for chicken shifts to the right.

7. A Change in the Price of Related Products: Complements A decrease in the price of Y, a complement for X, causes the demand for X to rise. –A decrease in the price of gasoline causes some people to travel more in their cars. Demand for travel shifts to the right. –A decrease in the price of steak causes some people to buy more steak sauce. Demand for steak sauce shifts to the right.

8. A Change in the Price of Related Products: Complements An increase in the price of Y, a complement for X, causes the demand for X to fall. –An increase in the price of gasoline causes some people to travel less in their cars. Demand for travel shifts to the left. –An increase in the price of steak causes some people to buy less steak sauce. Demand for steak sauce shifts to the left.

9. A Change in Income An increase in income permits a person to spend more, causing demand for some goods to increase. –Demand shifts to the right as income rises. A decrease in income limits a person’s ability to spend, causing demand for some goods to decrease –Demand shifts to the left as income falls.

10. A Change in Tastes and Preferences Changes in tastes and preferences can cause people to prefer more or less of any good. Tastes and preferences are influenced by advertising, new information, growing older, changing seasons, fads, etc. –Favorable changes in tastes and preferences shift demand to the right. –Unfavorable changes in tastes and preferences shift demand to the left.

11. A Change in the Number of Buyers As the population increases, demand for many goods increases. –Demand shifts to the right. As the population decreases, demand for many goods decreases –Demand shifts to the left.

12. Supply Definitions: Reprise In economics, –A change in quantity supplied occurs when a change in the price of the good itself causes a seller to be willing to sell more or less of the good. –A change in supply occurs when a seller is willing to sell more or less of a good because of a change in some other variable that is not the price of the good itself.

13. Change in Supply Changes in supply are shown by shifting the supply curve. –Increases in supply shift the supply curve to the right. S1S1 S2S2 Price Quantity 0

14. Change in Supply Changes in supply are shown by shifting the supply curve. –Decreases in supply shift the supply curve to the left. S1S1 S2S2 Price Quantity 0

15. A Change in Supply: Causes A change in supply may be caused by any of the following: –A change in the size of the industry –Technological progress –Changes in the price of inputs –Changes in the prices of related outputs

16. A Change in the Size of the Industry An increase in the number of suppliers in an industry increases supply. –The supply curve shifts to the right. A decrease in the number of suppliers in an industry decreases supply. –The supply curve shifts to the left.

17. Technological Progress Technological progress that permits a supplier to produce more, other things remaining the same, increases supply. –Technological progress increases productivity which decreases costs so more can be supplied at any given price. The supply curve shifts to the right.

18. A Change in the Price of Inputs A change in the price of inputs changes the cost of production. –If input prices increase, production costs increase, and other things remaining the same, a supplier will supply less at any given price. The supply curve shifts to the left.

19. A Change in the Price of Inputs A change in the price of inputs changes the cost of production. –If input prices decrease, production costs decrease, and other things remaining the same, a supplier will supply more at any given price. –The supply curve shifts to the right.

20. A Change in the Prices of Related Products A change in the price of a good produced by a multi-product industry may shift the supply curves of all the other goods produced by that industry. –If the price of a product, good Y, increases, firms have an incentive to shift resources to the production of Y and away from the production of another good such as good X. –The supply curve for X shifts to the left.

21. A Change in the Prices of Related Products A change in the price of a good produced by a multi-product industry may shift the supply curves of all the other goods produced by that industry. –If the price of a product, good Y, decreases, firms have an incentive to shift resources to the production of X and away from the production of Y. –The supply curve for X shifts to the right.