Demand definitions reprise
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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.

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Demand Definitions: Reprise

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Demand definitions reprise

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.


Change in demand

Change in Demand

  • Changes in demand are shown by shifting the demand curve.

    • Increases in demand shift the demand curve to the right.

Price

D2

D1

Quantity

0


Change in demand1

Change in Demand

  • Changes in demand are shown by shifting the demand curve.

    • Decreases in demand shift the demand curve to the left.

Price

D1

D2

Quantity

0


Change in demand causes

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.


A change in the price of related products substitutes

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.


A change in the price of related products substitutes1

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.


A change in the price of related products complements

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.


A change in the price of related products complements1

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.


A change in income

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.


A change in tastes and preferences

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.


A change in the number of buyers

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.


Supply definitions reprise

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.


Change in supply

Change in Supply

  • Changes in supply are shown by shifting the supply curve.

    • Increases in supply shift the supply curve to the right.

Price

S1

S2

Quantity

0


Change in supply1

Change in Supply

  • Changes in supply are shown by shifting the supply curve.

    • Decreases in supply shift the supply curve to the left.

Price

S2

S1

Quantity

0


A change in supply causes

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


A change in the size of the industry

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.


Technological progress

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.


A change in the price of inputs

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.


A change in the price of inputs1

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.


A change in the prices of related products

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.


A change in the prices of related products1

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.


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