Law of Quantity Demanded As Price Increases the Quantity Demanded Decreases As Price Decreases the Quantity Demanded Increases Market Demand Schedule Demand Graph Price of Normal and Inferior Goods ID: 803631
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Slide1
Supply and Demand
Unit # 2
Slide2Law of Quantity
Demanded
As Price Increases the Quantity
Demanded Decreases.As Price Decreases the Quantity Demanded Increases
Slide3Market Demand Schedule
Slide4Demand Graph
Slide5Price of Normal and Inferior Goods
Slide6Non-Price Demand Shifters-ITS ECO
Income
Taste and
PreferenceSubstitution
Expectations
of Future Price
Complements
Population
Slide7Increasing Demand Graph with shifters
Income: if your income increases or your taxes decrease
Taste: If you want to buy the item because it is popular/desired.
Substitutes
-Increase in the price of a item that can be used in place
Expectation
of future price: if the price is expected increase
Complements-a decrease in an item used with this item
Population
: Increase in
population
Slide8Decreasing Demand Graph With Shifters
Income: decrease in income or
increase
in taxesTaste: you won’t buy an item, because you don’t like it.
Substitutes
: If the price decreases on an item you can in its place
Expectation of future price: if the price is expected to be cheaper
Complements: if the price of a good used with this good increases.
Population: decrease in population
Slide9Substitution Shifts- 2 graphs (slider and shifter)
If the price of good that can be used in place of an item increases, the demand for this item will also increase. The other item is the slider (stay
online
) this item will shift to the rightIf the price of good that can used in place of this item decreases the demand for this
item
with also decrease. The other item is the slider (stay online) this item
will
shift the the left.
Slide10Complementary Goods Shifts
If the price of good that is used with this item increases, the demand for this item will decrease. The other item is the slider (stay online) this item will shift to the leftt
If the price of good that can used with this item decreases the demand for this item will increase. The other item is the slider (stay online) this item will shift the the right
Slide11Graphing practice: Shifts and Slides
Slide12Demand Elasticity and Inelasticity
Elasticity is measurement how
quantified
demand changes after a price change.
Elastic Demand will be impacted by a price change (
either
increase or decrease).
Inelastic Demand will not be impacted by a price change (
either
increase or decrease)
Slide13Factors that affect Demand Elasticity
Time
Relative Importance
Necessity vs Luxury
Availability of close substitutes
Slide14Law of Quantity Supplied
As the price of an item increases the
quantity
supplied also increases.As the price of an decreases the quantity supplied also decreases.
Slide15Supply Market Schedule
Slide16Supply Graph
Slide17Supply Shifters NITE
Number of Suppliers in the Market
Input Cost
Technology
Expectations of Future Price
Slide18Increasing Supply Graph
If the price is expected to
decrease
, the supply will increase.If Input Cost decrease, Supply will increase
If
Technology
increases, Supply will increase
If Expected future price is to decrease, supply will increase.
Slide19Decreasing Supply Graph
If the number of sellers decrease, supply will decrease
If Input Cost increase, supply will decrease
If technology decreases, supply decreases
If Expected Price is to increase, supply will decrease.
Slide20Graphing Practice
Slide21Elastic or Inelastic Supply
Elasticity of Supply measures how suppliers react to a price change.
Elastici Supply: Supplier will react to a price change (both positive
and negative)
Inelastic Supply:
Supplier
will not react to a price change.
Slide22Factors that affect Supply Elasticity
Time:
In the short run all supply is inelastic.
In the run long supply will become more elastic,
Slide23Equilibrium
Law of Supply and Demand:
Were
Quantity Supply meets Quantity Demanded.
Slide24Market Shortage or Price Ceiling
A price ceiling is when the federal government sets a maximum price for a good or service, below
equilibrium
.This will cause excess demand and a shortage.
Rent Control is an example of a Price Ceiling.
Slide25Market Surplus or Price Floor
A price floor is when the federal government sets a minimum price for a good or service, above equilibrium.
This will cause excess supply and a surplus.
Minimum Wage is an example of a Price Floor..
Slide26Graphing Practice