Sonal khanna eco.

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K J Somiaya Comprehensive College of education. PPT presentation of CAP

K J Somiaya Comprehensive College of education. PPT presentation of CAP

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  • 1. K.J. Somaiya Comprehensive College Of Education ,Training And Research (B.Ed ) NAME - SONAL KHANNA ROLL NO – 31 ECONOMICS CAUSES FOR CHANGES IN DEMAND AND SUPPLY
  • 2. Concentration on these slides is guaranteed to improve your economics grade. Warning
  • 3. Causes of Changes in Demand and Supply
  • 4. Let's Take A Look At The Five Demand Shifters ["TIMER"]
  • 5. D 1 D 2 P QD 1 QD 2 1."Change in Taste" [Direct]
  • 6. D 1 D 2 P QD 1 QD 2 2. Change in Income [Normal-Direct; Inferior-Inverse] More income results in more demand for new cars; less demand for used cars. New Cars Used Cars Less income results in more demand for used cars; less demand for new cars.
  • 7. D 1 D 2 P QD 1 QD 2 3. Change in Market Size [Direct] [Number of Consumers] More demand for both new and used cars New Cars Used Cars This is what we told 1 billion Chinese , as new potential consumers , when we opened trade relations with them in the 70s.
  • 8. D 1 D 2 P QD 1 QD 2 4. Expectations [of consumers] [about future price, availibility, & income] I f Mr.Rakesh responds to iRate customers who bought the iPhone at Rs39900 and says, “ iSorry , we will raise the price back to Rs39900 in 3 weeks.” iPhone Rs39900 Buy it now to save money.
  • 9. D 1 D 2 P QD 1 QD 2 4. Expectations [of consumers] [about future availability of goods] If there is expected to be a major shortage of toilet tissue , then consumers will stock up now or risk not getting any .
  • 10. QD 2 4. Expectations [of consumers] [about future income] D 1 D 2 P QD 1 Let’s say that we are coming out of recession & consumers feel secure about their jobs. [ Positive future income ]
  • 11. D 1 D 2 P QD 1 QD 2 4. Expectations [of consumers] [about future income] Let’s say that we are going into a recession and consumers don’t feel secure about their jobs. [ Negative future income ]
  • 12. Complement [ Inverse ] Substitute [ Direct ] Milk Cereal Pop Tarts D 1 D 2 P P 1 QD 1 P 2 D 1 D 2 D P 5. Prices of Related Goods [Substitutes-Direct; Complements-Inverse] QD 2
  • 13.  
  • 14. 1. Resource Cost [wages & raw materials ] [Inverse] Wages Raw Materials S If resource cost decreases supply Increases [making more $] If resource cost increases supply Decreases [making less $] S S P
  • 15. P1 P1 QS1 Broccoli “ Substitutes in production” I only have 200 acres S Corn S 1 P S 2 QS1 S 1 P S 2 S Corn Producers want to produce more of the good where price is increasing, or at least, where the price is not going down. Broccoli 2. Alternative Output Price Change [Inverse] P2 QS2 P2 QS2
  • 16. S Because cows produce more milk, farmers don’t have to have as many cows. [ saves $ ] S P 3. Technological Improvement [Cow Waterbeds] We love these cow waterbeds because we get better blood flow and can produce 30% more milk . Supply curve moves “udderly” to the right. Less skin abrasions so happier cows produce more milk. Mooooove over and give me that waterbed. Waterbedsforcows.com
  • 17. NFL Supply of FB games increased when the XFL was formed. S 3 QS QS XFL in 2001 4. Number of Suppliers [Direct] Because of the XFL’s cheerleaders many called this league, not the XFL, but the Supply of FB games each week XXXFL XFL [Extreme Football League] 8 new teams S 1 P Q $50
  • 18.
    • If oil p roducers expect future oil prices to decline , they will (increase/decrease) current production.
    S 1 Oil Prices expected to decrease 5. Producer Expectations about Future Price [“INVERSE”] P S 2 If oil p roducers expect future oil prices to increase , they will (increase/decrease) current production. S 2 Oil Prices expected to increase
  • 19. S 3 [Direct] P 6. Subsidies - free money from government Free money from the government ( subsidies ) induces suppliers to supply more. S 1 S 2 If subsidies are taken away, then suppliers are losing money and will decrease supply.
  • 20. S 3 [Inverse] P 7. Taxes Take Away Business Profits & Decrease Supply. If business have their taxes decreased , it moves the supply curve to the right. S 1 S 2 If business have their taxes increased , it moves the supply curve to the left. I’m losing profits.”
  • 21. Let’s check your memory
    • What are the market determents ?
        • DEMAND AND SUPPLY
    • Which are the reasons for CHANGE in demand?
        • TIMER
        • T aste I ncome M arket size E xpectation of consumers R elated goods (prices)
    • How does INCOME affect demand?
    • Inc income more purchases of new goods
  • 22. Let’s check your memory
      • What are the determinants of supply?
          • RATNEST
    • R esource cost, A lternative price change , T echnological improvements, N o:of suppliers, P roducer expectation of prices, S ubsidires, T axes
      • How do producers react to future supply changes?
          • With respect to changes in demand the producer will increase or decrease production
  • 23. Thank- You The End