This document discusses the law of market equilibrium and supply and demand analysis. It defines key terms like equilibrium, supply and demand curves, and externalities. It explains that a free market will naturally tend toward equilibrium as prices adjust when supply and demand are not equal. When the price is above or below equilibrium, costs like storage, spoilage, or search will cause prices to change until supply and demand are equal again. The document also outlines various factors that can shift the supply and demand curves and cause disequilibrium, and how prices and quantities will respond to try to reach a new equilibrium point.
Supply Demand and Equilibrium..
Market Exchange..
Law of Supply...
Law of Demand...
Laws of supply and demand versus the “theory of supply and demand”
Laws vs. Theory of Supply and Demand..
Different types of demand..
Market Supply ..
Demand Curve..
Supply Curve..
Market Equilibrium..
Elasticity..
Own price elasticity of demand..
Supply Demand and Equilibrium..
Market Exchange..
Law of Supply...
Law of Demand...
Laws of supply and demand versus the “theory of supply and demand”
Laws vs. Theory of Supply and Demand..
Different types of demand..
Market Supply ..
Demand Curve..
Supply Curve..
Market Equilibrium..
Elasticity..
Own price elasticity of demand..
This presentation focuses on demand and supply analysis.Emphasis is on knowledge and understanding for the following:
1. Demand
2. Law of demand
3. Quantity vs. Quality
4. Individual demand vs. Market demand
5. Factors affecting demand of commodity
6. Supply
7. Law of supple
8. Factors affecting supply of commodity
> Resources: DepEd SHS curriculum guide and Rex Book AE
> This helping material comes with a worksheet on a separate document. Message me for any questions. Hope this helps!
Applied Economics: Application of Demand and Supply (Chapter 2.1)
- The Market
- Demand
- The Law of Demand
- Non-Price Determinants of Demand
- Shifts of Demand Curve
- Supply
- The Law of Supply
- Non-Price Determinants of Supply
- Shits of Supply Curve
Supply and Demand GuideTo solve the homework problems do the f.docxpicklesvalery
Supply and Demand Guide
To solve the homework problems do the following:
1. Identify the determinant change
2. Shift the appropriate curve in the correct direction
3. Change price appropriately
4. Move along the other curve (the one that did not shift) in response to the price change.
The following information will tell you the determinants and how the change, as well as definitions of the key terms.
Demand
Demand: The amount that consumers are willing and able to purchase at various prices.
Law of Demand: Price and Quantity Demanded vary inversely.
Quantity Demanded: The amount that consumers are willing and able to buy at a particular price.
Change in Quantity Demanded: Changes in price change the quantity demanded. This is a Movement Along a Demand Curve in Response to a Price Change.
Change in Demand: This is a shift in the position of the demand curve, either upward or downward. If the curve shifts upward, consumers are saying they will pay more for all quantities of the good or service. If it shifts downward, consumers are saying they will pay less for all quantities of the good or service.
Determinants of Demand: The Demand Curve will shift only when one (or more) of the Determinants of Demand changes. These determinants are:
1. Size of Market: the number of consumers in the market for the good or service. If this factor increases, the curve shifts upward (increase in demand). If this decreases, the curve shifts downward (decrease in demand).
2. Consumer Tastes and Preferences: if these shift in favor of a product, the demand curve shifts upward (demand increases); if these shift against a product, the demand curve shifts downward (demand decreases).
3. Consumer Income: as the income of consumers increase, consumers purchase more of all normal goods (assume all the goods in the homework are normal goods), this shifts the demand curve upward (demand increases); if income decreases, then consumers buy less of all normal goods, this shifts the demand curve downward (demand decreases).
4. Prices of Related Goods:
a. Complimentary Goods: These are goods that are used to together like peanut butter and jelly. If the price of peanut butter goes up, the Quantity Demanded of peanut butter will decrease (a movement along a demand curve in response to a price change). However, the Demand for jelly will decline (decrease in demand) as fewer people buy it to go with the peanut butter, since they are buying less peanut butter.
b. Substitute Goods: These are goods that are used in place of each other. If the price of Coke Cola goes up, the Quantity Demanded of Coke does down (a movement along the demand curve). But the Demand for Pepsi – the substitute good – goes up as people substitute the lower priced Pepsi for the higher priced Coke (the Pepsi demand curve shifts upward).
5. Expectations about the Future: If people have a positive view of the future they will consumer more and save less. This shifts th ...
This presentation focuses on demand and supply analysis.Emphasis is on knowledge and understanding for the following:
1. Demand
2. Law of demand
3. Quantity vs. Quality
4. Individual demand vs. Market demand
5. Factors affecting demand of commodity
6. Supply
7. Law of supple
8. Factors affecting supply of commodity
> Resources: DepEd SHS curriculum guide and Rex Book AE
> This helping material comes with a worksheet on a separate document. Message me for any questions. Hope this helps!
Applied Economics: Application of Demand and Supply (Chapter 2.1)
- The Market
- Demand
- The Law of Demand
- Non-Price Determinants of Demand
- Shifts of Demand Curve
- Supply
- The Law of Supply
- Non-Price Determinants of Supply
- Shits of Supply Curve
Supply and Demand GuideTo solve the homework problems do the f.docxpicklesvalery
Supply and Demand Guide
To solve the homework problems do the following:
1. Identify the determinant change
2. Shift the appropriate curve in the correct direction
3. Change price appropriately
4. Move along the other curve (the one that did not shift) in response to the price change.
The following information will tell you the determinants and how the change, as well as definitions of the key terms.
Demand
Demand: The amount that consumers are willing and able to purchase at various prices.
Law of Demand: Price and Quantity Demanded vary inversely.
Quantity Demanded: The amount that consumers are willing and able to buy at a particular price.
Change in Quantity Demanded: Changes in price change the quantity demanded. This is a Movement Along a Demand Curve in Response to a Price Change.
Change in Demand: This is a shift in the position of the demand curve, either upward or downward. If the curve shifts upward, consumers are saying they will pay more for all quantities of the good or service. If it shifts downward, consumers are saying they will pay less for all quantities of the good or service.
Determinants of Demand: The Demand Curve will shift only when one (or more) of the Determinants of Demand changes. These determinants are:
1. Size of Market: the number of consumers in the market for the good or service. If this factor increases, the curve shifts upward (increase in demand). If this decreases, the curve shifts downward (decrease in demand).
2. Consumer Tastes and Preferences: if these shift in favor of a product, the demand curve shifts upward (demand increases); if these shift against a product, the demand curve shifts downward (demand decreases).
3. Consumer Income: as the income of consumers increase, consumers purchase more of all normal goods (assume all the goods in the homework are normal goods), this shifts the demand curve upward (demand increases); if income decreases, then consumers buy less of all normal goods, this shifts the demand curve downward (demand decreases).
4. Prices of Related Goods:
a. Complimentary Goods: These are goods that are used to together like peanut butter and jelly. If the price of peanut butter goes up, the Quantity Demanded of peanut butter will decrease (a movement along a demand curve in response to a price change). However, the Demand for jelly will decline (decrease in demand) as fewer people buy it to go with the peanut butter, since they are buying less peanut butter.
b. Substitute Goods: These are goods that are used in place of each other. If the price of Coke Cola goes up, the Quantity Demanded of Coke does down (a movement along the demand curve). But the Demand for Pepsi – the substitute good – goes up as people substitute the lower priced Pepsi for the higher priced Coke (the Pepsi demand curve shifts upward).
5. Expectations about the Future: If people have a positive view of the future they will consumer more and save less. This shifts th ...
Information Systems for Decision-MakingAssignment 1 The CEO’s.docxjaggernaoma
Information Systems for Decision-Making
Assignment 1: The CEO’s Challenge
Due Week 3 and worth 150 points
You’ve just left an all-hands meeting at your company*. The CEO was very upset at the rise of shadow IT
projects – a major indicator that the company’s internal information system has failed to meet its needs.
Because the current information system is inadequate, inefficient, and outdated, the CEO is inviting
everyone in the organization to propose a new operational, decision support, or enterprise information
system to replace it. The executives have allocated $5 million to fund the most promising idea.
This is your chance to make a difference in the company (not to mention your own career). Write your
proposal as a memo that the entire C-suite will review. Include at least these points, in your own words, to
be persuasive:
1. Identify the main functions of your proposed information system and why they are important to the
business.
2. Describe what types of data your information system will hold and how data quality will be
ensured.
3. Explain how the old information system handles the functions you mentioned, the problems that
occur, and why your information system will handle things better.
4. Offer evidence of feasibility: Show that similar information systems have been built successfully
and that they save more money than they cost.
The executives are busy, so keep your memo to 1-4 pages and avoid any extraneous content.
*You may use a current or former employer, but do not disclose anything confidential. Or, you can pick
another organization if you are familiar with their internal (not customer-facing) information systems. You
can disguise the organization and populate it with famous names. Made-up companies are problematic
because of the amount of detail and realism they require.
Supply and Demand
How are scarce resources and products allocated within an economy?
· Who or what determines at what price consumers will be willing and able to pay for a product?
· Who or what determines at what price producers and suppliers will be willing and able to supply a product?
Markets. Markets bring together the consumers and producers and suppliers of goods and services, and it is in markets where the exchange process occurs. For brevity sake, producers will be used to represent suppliers too.
· Because the exchange process involves a market where consumers and producers come together to make the exchange, there is ultimately an agreed-upon price and quantity between the two parties.
· In order to more fully understand how this exchange process takes place and how the consumer and producer determine price and quantity, we are going to discuss specifically first the DEMAND process, and then the SUPPLY process.
Quantity demanded is a function of, or depends upon, price. There are certain variables which affect or change demand from one level to a lower or higher level. Price of related goods, population, preferences, expectations, taxes.
CA NOTES ON THEORY OF DEMAND AND SUPPLY IN BUSINESS ECONOMICS
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Supply and Demand GuideTo solve the homework problems do the f.docxcalvins9
Supply and Demand Guide
To solve the homework problems do the following:
1. Identify the determinant change
2. Shift the appropriate curve in the correct direction
3. Change price appropriately
4. Move along the other curve (the one that did not shift) in response to the price change.
The following information will tell you the determinants and how the change, as well as definitions of the key terms.
Demand
Demand: The amount that consumers are willing and able to purchase at various prices.
Law of Demand: Price and Quantity Demanded vary inversely.
Quantity Demanded: The amount that consumers are willing and able to buy at a particular price.
Change in Quantity Demanded: Changes in price change the quantity demanded. This is a Movement Along a Demand Curve in Response to a Price Change.
Change in Demand: This is a shift in the position of the demand curve, either upward or downward. If the curve shifts upward, consumers are saying they will pay more for all quantities of the good or service. If it shifts downward, consumers are saying they will pay less for all quantities of the good or service.
Determinants of Demand: The Demand Curve will shift only when one (or more) of the Determinants of Demand changes. These determinants are:
1. Size of Market: the number of consumers in the market for the good or service. If this factor increases, the curve shifts upward (increase in demand). If this decreases, the curve shifts downward (decrease in demand).
2. Consumer Tastes and Preferences: if these shift in favor of a product, the demand curve shifts upward (demand increases); if these shift against a product, the demand curve shifts downward (demand decreases).
3. Consumer Income: as the income of consumers increase, consumers purchase more of all normal goods (assume all the goods in the homework are normal goods), this shifts the demand curve upward (demand increases); if income decreases, then consumers buy less of all normal goods, this shifts the demand curve downward (demand decreases).
4. Prices of Related Goods:
a. Complimentary Goods: These are goods that are used to together like peanut butter and jelly. If the price of peanut butter goes up, the Quantity Demanded of peanut butter will decrease (a movement along a demand curve in response to a price change). However, the Demand for jelly will decline (decrease in demand) as fewer people buy it to go with the peanut butter, since they are buying less peanut butter.
b. Substitute Goods: These are goods that are used in place of each other. If the price of Coke Cola goes up, the Quantity Demanded of Coke does down (a movement along the demand curve). But the Demand for Pepsi – the substitute good – goes up as people substitute the lower priced Pepsi for the higher priced Coke (the Pepsi demand curve shifts upward).
5. Expectations about the Future: If people have a positive view of the future they will consumer more and save less. This shifts th.
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
1. LAW OF MARKET EQUILIBRIUM
A free market, if out of equilibrium, tends toward equilibrium.
Free market = one in which prices and quantities are set by bargaining between fully informed
buyers and sellers of the good being traded, not by legal restrictions or by actors with market
power.
Note the assumptions of:
-- full information on both sides of the transaction, on the quality of the goods and on prices
being offered by other buyers and sellers.
-- no market power, which would occur if there were only one seller (a monopolist) or
only one buyer (a monopsonist).
In addition, for a market equilibrium to be socially optimal, there should be no externalities,
positive (scientific research) or negative (pollution) which affect parties who are not part of
the market transaction.
Equilibrium = equality of the quantity supplied and the quantity demanded;
a state in which neither prices or quantities show any tendency to change.
The second definition is preferable, since market clearing does not always occur -- for example, hotel
owners usually have some acceptable vacancy rate, job seekers will wait while they search for a job fitting their
talents and interests.
The numerical values of price and quantity in the above graph (and in later graphs) are purely for the sake of
illustration.
2. Demonstration of the law of market equilibrium.
1. Assume actual price is above market equilibrium price.
-- the negative slope of the demand curve for buyers will mean that the quantity demanded will be less
than the equilibrium quantity;
-- the positive slope of the supply curve for sellers will mean that the quantity supplied will be greater
than the equilibrium quantity;
-- hence the quantity supplied will be greater than the quanitity demanded.
This imposes storage costs and spoilage costs on suppliers --
fisherman find their catch spoiling,
farmers must build grain elevators to store their grain,
car dealers must pay interest to the bank on the loans they take out to buy the cars from GM or Honda.
Consumers are always happier with lower prices, and storage and spoilage costs give producers a motive to
lower their prices.
Note that the SPEED of adjustment can vary with the size of the costs of storage or spoilage:
fish spoil quickly, and the price adjusts quickly;
grain spoils less quickly, and farmers don't have to adjust this week;
cars will lose value only when the new model year begins, and prices adjust still less quickly;
jobless workers will take time to search for appropriate jobs; more highly educated workers generally
have more trouble finding a good match.
3. 2. Assume the actual price is below the equilbrium price.
The negative slope of the demand curve ensures that there will be a greater quantity demanded than at
the equilibrium price.
The positive slope of the supply curve ensures that there will be a smaller quantity supplied than at the
equilibrium price.
Hence the quantity demanded will exceed the quantity supplied. This excess demand will force
consumers to spend more time looking for sellers who have the good available, and to spend more time waiting
in line if they do find a seller with the good. These search costs and queuing costs will lead some consumers to
offer more for the good, and hence the price will tend to rise.
Since price will tend to rise when excess demand leads to shortages, and price will tend to fall when there is
excess supply, the only point at which price could be stable is when there is neither excess demand nor excess
supply. If there is neither excess demand nor excess supply, the quantity demanded equals the quantity supplied
-- and this is the definition of equilibrium.
You should not think of equilibrium as a permanent situation -- the supply and demand curves will shift
when anything other than the price of the good itself changes consumers' willingness to pay for the good or
changes producers' cost of production.
Equilibrium is a reference point to enable supply and demand analysis to predict the direction in which
prices and quantities will respond to any economic change.
4. SUPPLY AND DEMAND ANALYSIS
Something A curve Disequilibrium Prices change
happens >>>>> shifts >>>>>> results >>>> to lead towards a
new equilibrium
Changes that lead to an increase of demand:
-- an increase in income (for NORMAL goods)
Examples: LCD TVs, champagne, restaurant meals, vacations, sports cars
-- a decrease in income (for INFERIOR goods)
Examples: Tube TVs, MD 20/20, fast food meals, porch sitting, bus rides.
-- an increase in the price of substitutes
Examples: the price of tea increases and the demand for coffee increases;
the price of beef increases and the demand for chicken increases.
-- a decrease in the price of complements
Example: the price of gasoline falls and the demand for SUV's increases,
the room rate for a hotel near the golf course falls and the demand for golf increases.
-- a change in expectations of what will happen.
If you expect the shares of stock of a company will rise in value, you increase your demand for
the stock; if you expect prices of toilet paper or tuna fish or gold to rise in the future, you increase your
demand for the product now.
-- consumer tastes change.
While this sometimes happens due to an advertising campaign or a medical report on health
benefits, do not use this explanation unless you can explain what caused the change in tastes, and can
show that changes in price or income were not sufficient to explain the shift in demand.
Change income or prices of other goods in the opposite fashion to get the factors behind a decrease in demand.
5. Changes that lead to an increase of supply.
Anything that reduces the marginal cost of production at any given quantity of output leads to an increase
in supply.
This includes lower wages for workers in the industry, lower prices of raw materials or technological change.
Note: the common impression that technological change makes things more expensive is mistaken, except when
the change makes it possible to produce new goods (and this is an increase of supply from zero). Inventions do not get
adopted by firms unless they are profitable.
Joseph Schumpeter made the distinction between invention (scientific discovery) and innovation (the adoption of
an invention by firms, and pointed out that a long time could elapse between the two.
Other factors leading to an increase of supply:
-- expectations of future price decreases may increase supply now, as producers reduce inventories.
-- greater number of producers of a good will increase supply.
Graphically, an increase of supply is shown by a shift DOWN of the supply curve.
A lower cost of production makes producers willing, if they have to, to accept lower prices.
The vertical axis of a supply-demand graph is the price axis, so the curve begins at a lower point.
The major explanation of a decrease in supply is, of course, any factor that increases the marginal cost of
production for any given quantity.
Note that when supply shifts, the new equilibrium price and quantity move in opposite directions:
price drops and quantity increases in the case of an increase in supply,
price rises and quantity decreases in case of a decrease in supply.
6. Double shifts
When two changes occur at once, one affecting supply and the other demand, we can be sure of the
qualitative change in either price or quantity, but not both. Unless we have information on the equations of
supply and demand, we will be uncertain of the equilibrium change in either price or quantity.
Example: assume that wages in the auto industry increase, while incomes generally are falling.
The wage increase would lead to a shift upwards of the supply (a decrease in supply) in the auto
industry; the decrease of incomes would lead to a decrease in demand (if autos are a normal good). The graphs
below are meant to demonstrate that:
a. We know that the quantity of automobiles will fall -- both producers and consumers would reduce
their quantities at any given price.
b. Producers would require an increase in price at any given quantity; consumers would want a fall in
price in order to purchase the same quantity. What happens to price depends on the size of the shifts in supply
and demand.
Graph 1 -- Demand shifts more than supply Graph 2 -- Supply shifts more than demand
Quantity and price both fall Quantity falls, price rises
You should draw a graph in which supply and demand shift equally, to show that price can remain unchanged
while quantity falls.
Also draw three graphs for each of the following double shifts:
a. Demand and supply both increase (quantity increases, price uncertain)
b. Demand increases, but supply decreases (price increases, quantity uncertain)
c. Demand decreases, but supply increases (price decreases, quantity uncertain).