lesson 7 - shifting the supply and demand curve - power point - duke
TRANSCRIPT
Now shift it out…
*Demand and Supply
Price Quantity Demanded
.10 350
.15 300
.20 250
.25 200
.30 150
.35 100
.40 50
Binxy Cat Demand Schedule
*BinxysP
ric
es p
er
Bin
xy
Quantity (Millions of Binxys)
D
.55
.50
.45
.40
.35
.30
.25
.20
.15
.10
.05
50 100 150 200 250 300 350 400
The data for demand curve D indicates that at a price of .30 per Binxys, buyers would be willing to buy __________ million Binxys. Other things constant, if the price for Binxys increased to .40 per Binxy, buyers would be willing to buy _______ million Binxy. Such a change would be a decrease in____________. Other things constant, if the price of Binxys decreased to .20, buyers would be willing to buy _________ million Binxys. Such a change would be called an increase in _____________________.
150
50100 million
250
Quantity Demanded
Price Quantity Demanded
.05 300
.10 250
.15 200
.20 150
.25 100
.30 50
Now, let’s suppose there is a dramatic change in Federal income-tax rates that affects the disposable income of Binxy buyers. This change in income will result in a new set of data. Use the data below to plot the new demand curve for Binxys on the front page of this packet. Label the new demand curve D1 and fill in the information below.
Demand Shift: D1
*BinxysP
ric
es p
er
Bin
xy
Quantity (Millions of Binxys)
DD1
.55
.50
.45
.40
.35
.30
.25
.20
.15
.10
.05
50 100 150 200 250 300 350 400
Comparing the new demand curve (D1) with the original demand curve (D), we can say that the change in the demand for Binxys results in a shift of the demand curve to the ___________________. Such a shift indicates that at each of the possible prices shown, buyers are now willing to buy a _________________quantity; and at each of the possible quantities shown, buyers are willing to offer a _________________ maximum price. The cause of this demand curve shift was an___________ in tax rates that ____________________ the disposable income of Binxy buyers.
left
smaller
lower
increase decreases
Demand Shift: D2
Now, let’s suppose that there is a dramatic change in people’s tastes and preference for Binxys. This change will result in a new set of data. Use the data below to plot the new demand curve for Binxys on the front of this packet. Label the new demand curve D2 and fill in the information below.
Price Quantity Demanded
.20 350
.25 300
.30 250
.35 200
.40 150
.45 100
.50 50
*BinxysP
ric
es p
er
Bin
xy
Quantity (Millions of Binxys)
D
D2
D1
.55
.50
.45
.40
.35
.30
.25
.20
.15
.10
.05
50 100 150 200 250 300 350 400
Comparing the new demand curve (D2) with the original demand curve (D), we can say that the change in the demand for Binxys results in a shift of the demand curve to the _____________________. Such a shift indicates that at each of the possible prices shown, buyers are now willing to buy a ________________ quantity; and at each of the possible quantities shown, buyers are willing to offer a _________________maximum price. The cause of this shift in the demand curve was a change in people’s tastes and preference for Binxys.
right
larger
higher
Supply = Sellers
Law of Supply: tendency of suppliers to offer more of a good at a higher price.
Price SupplyPrice Supply
*How can we see the
Law of Supply?
Let’s use Binxy Cats……..(page 3)
*BinxysP
ric
es p
er
Bin
xy
Quantity (Millions of Binxys)
D
.55
.50
.45
.40
.35
.30
.25
.20
.15
.10
.05
50 100 150 200 250 300 350 400
S
Equilibrium Price
S1
P
Q
P
Q
*Factors that make the supply curve shift
1. Advances in technology.
Examples: LCD and Plasma televisions.P
rice
of
LC
D/P
lasm
a T
Vs
Quantity of televisions sold
S S1
2. Competition
Examples: Cell Phones.
Pri
ce o
f ce
ll p
ho
nes
Quantity of cell phones
S S1
3. Government InfluenceExamples:
Excise taxes: Causes a decrease in production.
Government Subsidies: Cause increase in production.
Pri
ce o
f ci
gar
ette
s
Quantity of cigarettes
S S1
Quantity of T-bone Steaks
S S1
Pri
ce o
f T-
bo
ne
Ste
aks
4. Production Costs
Examples: Fixed Costs (Rent).
Variable Costs (Heating).
Pri
ce o
f H
amb
urg
ers
Quantity of Hamburgers
S S1S2
5. Future Expectations of Price
Examples: Sun Screen in January.
Pri
ce o
f S
un
Scr
een
Quantity of Sun Screen
S S1
*Back to Binxys (page 4)
Price Quantity Supplied
.15 350
.20 300
.25 250
.30 200
.35 150
Binxy Cats Supply Schedule
*BinxysP
ric
es p
er
Bin
xy
Quantity (Millions of Binxys)
.55
.50
.45
.40
.35
.30
.25
.20
.15
.10
.05
50 100 150 200 250 300 350 400
S
Price Quantity Supplied
.20 300
.25 250
.30 200
.35 150
.40 100
Now, let’s suppose there is a dramatic change in the price of beef, a main ingredient in Binxys. This rise in the cost of production will result in a new supply curve. Use the data below to plot the new supply curve for Binxys. Label the new supply curve S1 and fill in the information below.
Supply Shift: S1
*BinxysP
ric
es p
er
Bin
xy
Quantity (Millions of Binxys)
S
D1
.55
.50
.45
.40
.35
.30
.25
.20
.15
.10
.05
50 100 150 200 250 300 350 400
S1
Price Quantity Supplied
.20 300
.25 250
.30 200
.35 150
.40 100
Now, let’s suppose there is a dramatic change in the price of beef, a main ingredient in Binxys. This rise in the cost of production will result in a new supply curve. Use the data below to plot the new supply curve for Binxys. Label the new supply curve S1 and fill in the information below.
Supply Shift: S1
*BinxysP
ric
es p
er
Bin
xy
Quantity (Millions of Binxys)
S
.55
.50
.45
.40
.35
.30
.25
.20
.15
.10
.05
50 100 150 200 250 300 350 400
S2
S S1S S1