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SUPPLY

SUPPLY. DEMAND. Plot the following:. Price. Quantity Demanded. Qd. P. $9. 2. 8. 3. 5. 7. 6. 9. Price. Quantity Demanded. Qd. P. $9. 2. 8. 3. 5. 7. 6. 9. P. Qd. 9. just a point on the curve. To be on the demand curve a person must be WILLING and ABLE to

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SUPPLY

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  1. SUPPLY DEMAND

  2. Plot the following: Price Quantity Demanded Qd P $9 2 8 3 5 7 6 9

  3. Price Quantity Demanded Qd P $9 2 8 3 5 7 6 9 P Qd 9 just a point on the curve. To be on the demand curve a person must be WILLING and ABLE to purchase the product or service. 8 7 6 D is the entire curve. 2 3 9 5 Q

  4. Price Quantity Demanded Qd P $9 2 8 3 5 7 6 9 P Qd 9 just a point on the curve. There is an ___________ relationship between price and quantity. 8 inverse 7 6 D is the entire curve. 2 3 9 5 Q

  5. 9 8 7 6 D 2 3 9 5 Q Definitions: Quantity demanded--it is the amount that will be purchased at a specific P. Law of Demand– As price goes down, consumers will buy more!

  6. Qd 9 just a point on the curve. 8 7 6 D is the entire curve. 2 3 9 5 Q Price changes Quantity Demanded Price DOES NOT CHANGE DEMAND!!!!!!!!

  7. Only one variable Qd PRICE PRICE DOES NOT DEMAND!!

  8. Eight Determinants of Demand: 1. # of consumers 2. Income--Normal Goods As people’s incomes go up demand for normal goods increases. As people’s income go down, demand for normal goods decrease. 3. Income--Inferior Goods As people’s incomes go up demand for inferior goods decreases. As people’s income go down, demand for inferior goods increases.

  9. With a partner, come up with THREE inferior and THREE normal goods!

  10. ______Used Furniture Store ______Lazy Boy Store

  11. $25

  12. Eight Determinants of Demand: 1. # of consumers 2. Income--Normal Goods 3. Income--Inferior Goods 4. Preferences

  13. Eight Determinants of Demand: 1. # of consumers 2. Income--Normal Goods 3. Income--Inferior Goods 4. Preferences 5. Price of related products: Substitutes

  14. Eight Determinants of Demand: 1. # of consumers 2. Income--Normal Goods 3. Income--Inferior Goods 4. Preferences 5. Price of related products: Substitutes 6. Price of related products: Complements

  15. Eight variables that shift Demand: 1. # of consumers 2. Income--Normal Goods 3. Income--Inferior Goods 4. Preferences 5. Price of related products: Substitutes 6. Price of related products: Complements 7. Expected future P’s by consumers 8. Expected future Y (Income) by consumers

  16. What happens to the price of gasoline when consumers think the price of oil will go up? • Speculation increases demand! • The price goes up!

  17. What device do consumers use to buy stuff NOW when they expect their future income will increase?

  18. Review • Law of Demand • P____ Qd _____ • P____ Qd _____ • P changes _____, not _________.

  19. The price of Coke doubles, what happens to the market for Pepsi? P S Increase in price of related product— Substitute P1 P D1 D Q Q1 Q Your market is: Pepsi

  20. What happens to the market for downloaded music when the price of an MP3 player or Ipod goes down? P S Decrease in the price of a complement. P1 P D1 D Q Q1 Q Your market is: Downloaded Music

  21. New market research reveals that corn gives you gas. P S Change in onsumer preference P P1 D D1 Q1 Q Q Your market is: Corn

  22. The U.S. goes through a boom economy, what happens to the market for steak? P S Increase in incomes— Normal goods. P1 P D1 D Q Q1 Q Your market is: Steak

  23. What happens to the market for generic canned goods When there is an income tax increase P S Decrease in Y Inferior good. P1 P D1 D Q Q1 Q Your market is: Generic canned vegetables

  24. Demand Review

  25. Pitbull comes out with a new ad campaign P S Change in preferences P1 P D1 D Q Q1 Q Your market is: Pitbull CD’s

  26. Immigrants leave the state of GA due to new immigration law P S Change in # of consumers P P1 D D1 Q1 Q Q Your market is: Authentic Hispanic food products

  27. Recession worsens, what happens to the market for second hand clothes? P S Decrease in incomes— inferior goods. P1 P D1 D Q Q1 Q Your market is: Second hand clothes

  28. SUPPLY

  29. Plot the following: Price Quantity Supplied Qs P $6 2 7 3 5 8 9 9

  30. P S is the entire curve. Qs just a point on the curve. Q Definitions: Quantity supplied--it is the amount that will be sold at a specific P. Law of Supply – Sellers tend to offer more of a good at a higher price!

  31. P S is the entire curve. Qs just a point on the curve. Q Price changes Quantity Supplied Price DOES NOT CHANGE SUPPLY!!!!!!!!

  32. Only one variable Qs PRICE PRICE DOES NOT SUPPLY!!

  33. GUESS HOW MANY DETERMINANTS OF SUPPLY THERE ARE? 5 And if you don’t memorize these variables, YOU WILL FAIL THIS CLASS!! ARE THERE ANY QUESTIONS?

  34. Five determinants of Supply: 1. # of suppliers 2. Costs 3. Physical Availability of Resources 4. Technology 5. Expected Future Prices by Suppliers

  35. Review • Law of Demand = P Qd ____ = P Qd ____ • Law of Supply = P ___Qs = P ____ Qs • What variable changes Qd? • What variable changes Qs?

  36. You can MAKE MONEY by knowing the laws of supply and demand.

  37. Major Drought Hits Brazil

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