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Graphing Heaven Steps to Drawing a Supply and Demand Graph

Graphing Heaven Steps to Drawing a Supply and Demand Graph. Price ($). Draw the axes. S. Label the axes. Draw the curves. Label the curves. P 1. E. Find and label the starting price and quantity. D. Q 1. 0. Quantity (Q). 5 Steps to Graphing Heaven

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Graphing Heaven Steps to Drawing a Supply and Demand Graph

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  1. Graphing Heaven Steps to Drawing a Supply and Demand Graph Price ($) Draw the axes S Label the axes Draw the curves Label the curves P1 E Find and label the starting price and quantity D Q1 0 Quantity (Q)

  2. 5 Steps to Graphing Heaven Step 2- Read the situation and answer questions 1, 2, and 3 Situation- Consumers love big screen TV’s. What impact does this have on the price and quantity of big screen TV’s? Taste! 1. Which determinant of supply or demand is affected? Demand Determinants (SEPTIC) Supply Determinants • Substitutes • Expectations • Population • Taste • Income • Complements Expectations Number of Suppliers/Producers Cost of Production

  3. 5 Steps to Graphing Heaven Step 2- Read the situation and answer questions 1, 2, and 3 Situation- Consumers love big screen TV’s. What impact does this have on the price and quantity of big screen TV’s? 2. What is affected supply or demand? Demand! 3. Which way does the curve shift? Away from 0, from D1 to D2

  4. 5 Steps to Graphing Heaven Step 3- Draw the shift and label everything Price (P) S P2 P1 D2 D1 Q1 0 Quantity (Q) Q2

  5. 5 Steps to Graphing Heaven Step 4- Answer question 4 Price (P) 4. Movement along which curve? S P2 ∆Qs; Movement along the S curve P1 D2 D1 Q1 0 Quantity (Q) Q2

  6. 5 Steps to Graphing Heaven Step 5- Answer questions 5 (both parts) Price (P) 5. What happens to price? S Price increases from P1 to P2 P2 P1 D2 D1 Q1 0 Quantity (Q) Q2

  7. 5 Steps to Graphing Heaven Step 5- Answer questions 5 (both parts) Price (P) 5. What happens to quantity? S Quantity increases from Q1 to Q2 P2 P1 D2 D1 Q1 0 Quantity (Q) Q2

  8. Determinants of Demand and Supply 11. Determinants of Demand: Reasons for Change/ Shift in Demand (SEPTIC) A change in: Price of Substitutes- things that replace each other: pork v. beef, pinto beans vs. black beans, TV shows and video rentals (If P of Substitute ↑, D for other good ↑) (If P of A ↑, D for B ↑). Consumer Expectations-if they expect a change in prices or their income

  9. Determinants of Demand and Supply 11. Determinants of Demand: Reasons for Change/ Shift in Demand (SEPTIC) A change in: Population: Number of consumers, more or less people Consumer Taste- preferences, styles, fads, fashion, health, advertising, popularity

  10. Determinants of Demand and Supply 11. Determinants of Demand: Reasons for Change/ Shift in Demand (SEPTIC) A change in: Income (y) (If Y ↑ , D ↑. If Y↓, D↓) Steak, Sports Car Price of Complements- things that go together: ketchup and fries; movies and popcorn, cars and gasoline (If P of Complement ↑, D for other good ↓) (If P of A ↑, D for B ↓).

  11. Determinants of Demand and Supply 12. Determinants of Supply: Reasons for Change/ Shift in Supply (GETNoCredit) A change in: Government Policies - taxes, regulations,tariffs, quotas, setting prices, or any other government action. Expectations- businesses expect a change to occur to sales, profits, etc.

  12. Determinants of Demand and Supply 12. Determinants of Supply: Reasons for Change/ Shift in Supply (GETNoCredit) A change in: Technology- increases the efficiency of your natural, human, capital, and entrepreneurship resources. Number of Suppliers- Companies entering or leaving the market.

  13. Determinants of Demand and Supply 12. Determinants of Supply: Reasons for Change/ Shift in Supply (GETNoCredit) A change in: Costs of Production- anything that increases or decreases the cost of your land , labor, capital, and entrepreneurship.

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