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Understanding Demand, Supply, and Equilibrium: A Comprehensive Guide

Explore the concepts of demand, supply, and equilibrium in economics, including movements and shifts in demand and supply curves, and their impact on prices and quantities. Learn about related goods, the law of supply, and equilibrium changes through practical examples and graphs.

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Understanding Demand, Supply, and Equilibrium: A Comprehensive Guide

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  1. Demand, Supply, and Equilibrium Bringing it to the quiz

  2. Demand: Movement vs. Shifts Which is related to price and which to “other things” (like taste, income, advertising, related products, expectations, etc.)

  3. Demand: Related goods • Complementary • Substitute • Normal • Inferior

  4. Supply: Law of Movement along the curve is price increase and suppliers willingness to produced more as a result

  5. Supply: Shifts Input Prices …shifts the S curve Technology …shifts the S curve # of Sellers …shifts the S curve Expectations …shifts the S curve

  6. Equilibrium Changes • What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

  7. Graph it!! Peanut Butter Price S Pe D Quantity Qe What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

  8. What’s shifting? Supply curve or demand curve? • Flip flops in December • Pumpkins after a flood Price S Pe D Qe

  9. Surplus/Shortages

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