The document discusses simultaneous changes in demand and supply for bacon in Alberta. It begins by showing the original supply and demand curves for bacon, with an equilibrium price of $5.25 per kilo and quantity of 13-14 units. It then provides examples of factors that could increase demand or supply. It explains that when both increase or decrease, quantity traded will change in a determinate direction but price may be indeterminate. When demand increases and supply decreases, or vice versa, price will change in a determinate direction but quantity may be indeterminate. The key effects of simultaneous demand and supply changes on price and quantity are summarized.

1. Simultaneous Change in
Demand and Supply
… of Bacon
in Alberta
Presented by Kim Groome for ECON250, August

2. Simultaneous Change
in Demand and Supply

3. Simultaneous Change
in Demand and Supply

4. Let’s first consider …
Supply and Demand
For kilos of Bacon in Alberta
Week 1
Price
Quantity
Demanded
Quantity
Supplied
$1.50 21
$2.00 20
$2.50 19
$3.00 18
$3.50 17 3
$4.00 16 6
$4.50 15 9
$5.00 14 12
$5.50 13 15
$6.00 12 18
$6.50 11 21
$7.00 10 24
$7.50 9 27
$8.00 8 30
$8.50 7 33
$9.00 6 36
Qo
There is an equilibrium Price at around $5.25 per kilo with a Quantity traded of 13-14 Units.
Note: These numbers are not true, but inspired and altered from Stats Can numbers for 2010 and 2011.

5. And then …
There is an increase in demand, maybe:
 A certain fad diet said we could eat bacon all day and lose weight (consumer preference), or maybe
 Turkey bacon skyrocketed (price of related products), or maybe
 There is a rumour of upcoming hog shortages (future availability).
The increase in Demand is D2.
D2

6. And then …
There is an increase in supply, maybe:
 Sodium nitrate and liquid smoke went on sale (price of resources), or maybe
 Turkey bacon has a recall from Salmonella (price of substitutes in production).
The increase in Supply is S2.
D2
S2

7. After the first week period …
There can be, and often are,
simultaneous changes in Supply and Demand.
D2
S2
Watch what happens to the Price and the Quantity traded !

8. D2
S2
After the first week period … .
There can be, and often are,
simultaneous changes in Supply and Demand.
Watch what happens to the Price and the Quantity traded !

9. D2
S2
After the first week period … ..
There can be, and often are,
simultaneous changes in Supply and Demand.
Watch what happens to the Price and the Quantity traded !

10. D2
S2
After the first week period … …
There can be, and often are,
simultaneous changes in Supply and Demand.
Watch what happens to the Price and the Quantity traded !

11. D2
S2
After the first week period … … .
There can be, and often are,
simultaneous changes in Supply and Demand.
Watch what happens to the Price and the Quantity traded !

12. D2
S2
After the first week period … … ..
There can be, and often are,
simultaneous changes in Supply and Demand.
Watch what happens to the Price and the Quantity traded !

13. D2
S2
After the first week period … … …
There can be, and often are,
simultaneous changes in Supply and Demand.
Watch what happens to the Price and the Quantity traded !

14. D2
S2
After the first week period … … …
There can be, and often are,
simultaneous changes in Supply and Demand.
Watch what happens to the Price and the Quantity traded !

15. D2
S2
So …
WHAT happens to the Price and the
Quantity traded?

16. Refer to the flows of:
 Demand  shortage  P & Q traded
 Supply  shortage  P & Q traded
 Demand  surplus  P & Q traded
 Supply  surplus  P & Q traded
D2
S2
It is possible, occasionally, that changes in Demand and in Supply result in no Price change.
IN FACT, RARELY DOES PRICE OR QUANTITY STAY THE SAME. Let’s see why …
Q2
Know these !!!
Know this is rare!!!

17. If both Demand & Supply increase?
 Demand  P & Q traded
 Supply  P & Q traded
D2
S2
In both situations, demand and supply increased.
In both situations Quantity traded increased.
However, the new Price has increased in the first situation, and decreased in the second.
When both Demand and Supply increase, quantity increases, and Price is indeterminate.
P?
Price is
indeterminate!
 Quantity traded
D2
S2
Q2
Q2

18. If both Demand & Supply decrease?
 Supply  P & Q traded
 Demand  P & Q traded
D2
S2
In both situations, demand and supply decreased.
In both situations Quantity traded decreased.
However, the new Price has increased in the first situation, and decreased in the second.
When both Demand and Supply decrease, quantity decreases, and Price is indeterminate.
P?
Price is
indeterminate!
 Quantity traded
D2
S2
Q2
Q2

19.  Demand  P & Q traded
If Demand increases & Supply decreases?
 Supply  P & Q traded
D2
S2
In both situations, demand increased and supply decreased.
In both situations, Price increased.
However, the new Quantity traded has increased in one, and decreased in the other.
When Demand increases and Supply decreases, price increases, Quantity is indeterminate.
Q?
Quantity is
indeterminate!
 Price
D2
S2
Q2
Q2

20.  Supply  P & Q traded
If Demand decreases & Supply increases?
 Demand  P & Q traded
D2
S2
D2
S2
Q2 Q2
 Price Q?
Quantity is
indeterminate!
In both situations, demand decreased and supply increased.
In both situations, Price decreased.
However, the new Quantity traded has decreased in one, and increased in the other.
When Demand decreases and Supply increases, price decreases, Quantity is indeterminate.

21. Let’s review:
1. Finish this chart:
 Demand   P &  Q traded
 Demand   P &  Q traded
 Supply   P &  Q traded
 Supply   P &  Q traded
2. Do this increase in Demand and increase in Supply math:
 Demand   P &  Q traded
 Supply   P &  Q traded
Why is ____________ indeterminate? ________________________________________ .

22. Let’s review:
3. What are 3 of the 5 determinants for changes in Demand?
i)
ii)
iii)
4. What are 4 of the 6 determinants for changes in Supply?
i)
ii)
iii)
iv)
5. Do you find graphing relationships between prices and quantities helps you to visualize the relationship for
Demand and Supply?

23. References
Sayre, J., & Morris, A. J. (2012). Principles of microeconomics. New York, NY: McGraw Hill.
Statistics Canada. (2013). Survey of household spending: Detailed food expenditures. Retrieved August 1, 2013, from
http://www5.statcan.gc.ca/cansim/pick-choisir?lang=eng&p2=33&id=2030028