Demand And Supply Analysis

Law of Demand ,[object Object],[object Object],[object Object]

Explanations for Law of Demand ,[object Object],[object Object]

Substitution Effect ,[object Object],[object Object],[object Object]

Income Effect ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Exhibit 1 : Demand Schedule & Demand Curve for Pizza The demand schedule lists possible prices, along with quantity demanded at each price. The demand curve at the right shows each price / quantity combination listed in the demand schedule as a point on the demand curve. (a) Demand Schedule Price per Quantity Demanded Pizza per Week (millions) a) $15 8 b) 12 14 c) 9 20 d) 6 26 e) 3 32 (b) Demand Curve e d c b $0 $3 $6 $9 $12 $15 $18 8 14 20 26 32 Millions of Pizzas per week Price per Pizza a

Demand and Quantity Demanded P r i c e p e r q u a r t 8 14 20 26 32 $15.00 12.00 9.00 6.00 3.00 0 a b c d e D Millions of pizzas per week ,[object Object],[object Object],[object Object]

Individual Demand Market Demand ,[object Object],[object Object],[object Object]

Shifts of the Demand Curve ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Exhibit 2: Increase in the Market Demand $15 12 9 6 3 Price ,[object Object],[object Object],0 8 14 20 26 32 Millions of pizzas per week D b D' f

Changes in Consumer Income ,[object Object],[object Object],[object Object]

Changes in the Prices of Related Goods ,[object Object],[object Object],[object Object],[object Object]

Changes in Consumer Expectations ,[object Object],[object Object]

Supply ,[object Object],[object Object],[object Object],[object Object]

Law of Supply ,[object Object],[object Object],[object Object],[object Object]

Exhibit 3: Supply Schedule and Curve for Pizzas 12 16 20 24 28 $15 12 9 6 3 0 S Millions of pizzas per week ,[object Object],[object Object],Price Supply Schedule Price per Quantity Supplied Pizza per Week (millions) $15 28 12 24 9 20 6 16 3 12

Supply and Quantity Supplied ,[object Object],[object Object]

Individual Supply and Market Supply ,[object Object],[object Object],[object Object]

Shifts of the Supply Curve ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Exhibit 4:Change in Technology Can Mean an Increase in Supply $15.00 12.00 9.00 6.00 3.00 0 12 16 20 24 28 Millions of pizzas per week S g S' h ,[object Object],[object Object],[object Object],Price per quart

Changes in the Prices of Relevant Resources ,[object Object],[object Object],[object Object]

Prices of Alternative Goods ,[object Object],[object Object],[object Object]

Changes in Producer Expectations ,[object Object],[object Object]

Number of Producers ,[object Object],[object Object],[object Object]

Demand and Supply Create a Market ,[object Object],[object Object],[object Object],[object Object]

Markets ,[object Object],[object Object],[object Object]

Exhibit 5: The Market for Pizzas

Exhibit 5: The Market for Pizzas Millions of pizzas per week $15.00 12.00 9.00 6.00 3.00 0 ,[object Object],[object Object],[object Object],14 20 24 Price c S D Surplus

Exhibit 5: The Market for Pizzas Millions of pizzas per week $15.00 12.00 9.00 6.00 3.00 0 c S D ,[object Object],[object Object],16 20 26 Price Shortage

Equilibrium ,[object Object],[object Object],[object Object]

Changes in Equilibrium ,[object Object],[object Object]

Exhibit 6: Effects of an Increase in Demand

Exhibit 6: Effects of an Increase in Demand ,[object Object],[object Object],[object Object],20 Millions of pizzas per week 9 0 D S $12 D' 24 30 Price c g

Shifts of the Demand Curve ,[object Object],[object Object]

Exhibit 7: Effects of an Increase in Supply

Exhibit 7: Effects of an Increase in Supply ,[object Object],[object Object],[object Object],D S $9 20 S ' 26 6 30 Price Millions of Pizzas per Week d c

Shifts of the Supply Curve ,[object Object],[object Object],[object Object],[object Object]

Simultaneous Shifts in Demand and Supply ,[object Object],[object Object]

Exhibit 8: Indeterminate Effect of an Increase in Both Supply and Demand p 0 Units per period S D p' Q' S' D' Q ,[object Object],[object Object],[object Object],a) Shift in demand dominates Price

Exhibit 8: Indeterminate Effect of an Increase in Both Supply and Demand p Units per period D S 0 p" Q" D" S" Q Price ,[object Object],[object Object],b) Shift in supply dominates

Exhibit 9: Effects of Changes in Both Supply and Demand Supply increases Supply decreases Demand increases Demand decreases Change in Demand Equilibrium price price change is indeterminate . Equilibrium quantity increases . Equilibrium price rises. Equilibrium quantity change is indeterminate . Equilibrium price falls. Equilibrium quantity change is indeterminate. Equilibrium price change is indeterminate. Equilibrium quantity decreases. Change in Supply

Disequilibrium Prices ,[object Object],[object Object]

Exhibit 11: Price Floors and Price Ceilings

Exhibit 11a: Effects of a Price Floor $2.50 14 19 24 S D Millions of gallons per month Surplus 0 ,[object Object],[object Object],[object Object],[object Object],Price per gallon $1.90

Exhibit 11b: Effects of a Price Ceiling $1000 $600 40 50 60 D S Thousands of rental units per month 0 ,[object Object],[object Object],[object Object],[object Object],[object Object],Monthly rent Shortage

Summary ,[object Object],[object Object],[object Object]

Demand And Supply Analysis

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Demand And Supply Analysis