increases and decreases in supply and demand mr. raposo monday, october 5, 2009
TRANSCRIPT
Increases and Decreases in Increases and Decreases in Supply and DemandSupply and Demand
Mr. RaposoMr. Raposo
Monday, October 5, 2009Monday, October 5, 2009
Agenda
Increase/decrease in supplyIncrease/decrease in supply Increase/decrease in demandIncrease/decrease in demand HW Chapter 2 quiz tomorrowHW Chapter 2 quiz tomorrow Begin Facebook theorist projectBegin Facebook theorist project
(groups of 3 or 4)(groups of 3 or 4)
The Equilibrium Market for Blu-ray The Equilibrium Market for Blu-ray PlayersPlayers
(thousands)(thousands)
(Hun
dred
s of
dol
lars
)
S2
An Increase in the Supply of Blu-ray An Increase in the Supply of Blu-ray PlayersPlayers
Surplus of 100
3
300
(thousands)(thousands)
(Hun
dred
s of
dol
lars
)
An increase in the supply of Blu-ray players An increase in the supply of Blu-ray players causes the supply curve to shift to the right. causes the supply curve to shift to the right. The shift from S1 to S2 causes a temporary The shift from S1 to S2 causes a temporary surplus (of 100 blu-ray’s). As a result, surplus (of 100 blu-ray’s). As a result, price falls until a new equilibrium point of price falls until a new equilibrium point of supply and demand is reached. The new supply and demand is reached. The new equilibrium price is $300 and 300 blu-ray equilibrium price is $300 and 300 blu-ray players ( a fall in price by $100 and a rise in players ( a fall in price by $100 and a rise in quantity by 50 blu-ray players). quantity by 50 blu-ray players).
An Increase in the Supply of Blu-ray An Increase in the Supply of Blu-ray PlayersPlayers
S0
A Decrease in the Supply of blu-ray’s A Decrease in the Supply of blu-ray’s PlayersPlayers
Shortage of 100
5
200(thousands)(thousands)
(Hun
dred
s of
dol
lars
)
An decrease in the supply of blu-ray players An decrease in the supply of blu-ray players causes the supply curve to shift to the left. The causes the supply curve to shift to the left. The shift from S1 to S0 causes a temporary shortage shift from S1 to S0 causes a temporary shortage (of 100 blu-ray’s). (of 100 blu-ray’s).
As a result, price rises until a new equilibrium As a result, price rises until a new equilibrium point of supply and demand is reached. The new point of supply and demand is reached. The new equilibrium price is $500 and 200 blu-ray players. equilibrium price is $500 and 200 blu-ray players.
Price has increased by $100 and quantity has Price has increased by $100 and quantity has fallen by 50 Blu-ray playersfallen by 50 Blu-ray players
..
A Decrease in the Supply of Blu-ray PlayersA Decrease in the Supply of Blu-ray Players
D2
An Increase in the Demand for blu-ray An Increase in the Demand for blu-ray PlayersPlayers
Shortage of 100
5
300
(thousands)(thousands)
(Hun
dred
s of
dol
lars
)
An increase in the demand for blu-ray players An increase in the demand for blu-ray players causes the demand curve to shift to the right. causes the demand curve to shift to the right.
The shift from D1 to D2 causes a temporary The shift from D1 to D2 causes a temporary shortage (of 100 blu-ray’s). As a result, price shortage (of 100 blu-ray’s). As a result, price rises until a new equilibrium point of supply rises until a new equilibrium point of supply and demand is reached. The new equilibrium and demand is reached. The new equilibrium price is $500 and 300 blu-ray’s D players. price is $500 and 300 blu-ray’s D players.
Price has increased by $100 and quantity has Price has increased by $100 and quantity has fallen by 50 blu-ray’s playersfallen by 50 blu-ray’s players
..
An Increase in the Demand for blu-ray An Increase in the Demand for blu-ray PlayersPlayers
D0
A Decrease in the Demand for blu-ray A Decrease in the Demand for blu-ray PlayersPlayers
Surplus of 100
3
200(thousands)(thousands)
(Hun
dred
s of
dol
lars
)
A decrease in the demand for blu-ray A decrease in the demand for blu-ray players causes the demand curve to shift to players causes the demand curve to shift to the left. The shift from D1 to D0 causes a the left. The shift from D1 to D0 causes a temporary surplus (of 100 Blu-ray). As a temporary surplus (of 100 Blu-ray). As a result, price falls until a new equilibrium result, price falls until a new equilibrium point of supply and demand is reached. The point of supply and demand is reached. The new equilibrium price is $300 and 200 blu-new equilibrium price is $300 and 200 blu-ray players. ray players.
Price has decreased by $100 and quantity Price has decreased by $100 and quantity has fallen by 50 blu-ray playershas fallen by 50 blu-ray players
A decrease in the Demand for blu-ray PlayersA decrease in the Demand for blu-ray Players
SummarySummaryCeteris Paribus……. Increase in supply causes a decrease in
price and an increase in quantity Decrease in supply causes an increase in
price and an decrease in quantity Increase in demand causes an increase in
price and an increase in quantity Decrease in demand causes an decrease in
price and an decrease in quantity
Effect Price (P) Quantity (Q) Demand (D) Supply (S)
Increase in Supply
Decrease Increase Unchanged Increase Right
Decrease in Supply
Increase Decrease Unchanged Decrease Left
Increase in Demand
Increase Increase Increase Right Unchanged
Decrease in Demand
Decrease Decrease Decrease Left Unchanged
SummarySummary