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Supply and Demand

Supply and Demand. Daniel Ji - AgEd 410, Fall 2012. Overview. Supply Supply Curve Shifters Δ in Supply Curve. Demand Demand Curve Shifters Δ in Demand Curve. Equilibrium. 1. Supply. Definition: Supply the various quantities of a good that sellers will place on the market

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Supply and Demand

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  1. Supply and Demand Daniel Ji - AgEd 410, Fall 2012

  2. Overview • Supply • Supply Curve Shifters • Δ in Supply Curve • Demand • Demand Curve Shifters • Δ in Demand Curve • Equilibrium 1

  3. Supply • Definition: Supply the various quantities of a goodthat sellers will place on the market Supply Curve 2 3

  4. Supply • A supply schedule = the various quantities of the good that sellers will provide opposite the various alternative prices of the good. • It is the sum of the quantities all of the individual sellers in a market will supply. • A supply curve is a supply schedule plotted on a graph. The vertical axis of the graph measures price per unit, and the horizontal axis measures quantity of the good supplied at a given time. • The term "supply" refers to the entire supply schedule or curve. • Usually the supply curve will be upward sloping to the right, since a higher price will induce sellers to place more of the good on the market. • At a given time, a change in price will be accompanied by a corresponding change in the quantity supplied to a market by sellers. This is referred to as a change in the quantity supplied, and is graphically demonstrated by a movement along a given supply curve.

  5. Supply Curve Shifters • Prices of Inputs Used • Production of Technology • Weather Conditions • Prices of Other Products • Government Programs • Seller’s Expectations 4 5 7 6

  6. Video Khan Academy Factors Affecting Supply

  7. Change in Supply Curve • A Change in Supplyis defined as a shift in the entire supply curve. • Increase in supply means that at each price, the quantity supplied will be greater. • An increase in supply is a shift of the supply curve to the right. 8

  8. Change in Supply Curve • A decrease in supply means that at each price, the quantity supplied will be less. • A decrease in supply is a shift of the supply curve to the left. 9

  9. Activity 1 Identify which supply curve shifter the picture represents. 10 11 13 13

  10. Demand • Definition: Demand is the quantities of a good that buyers will purchase. Demand Curve 2 14

  11. Demand Shifters • Consumers' tastes and preferences • The number of consumers in a market • Consumers' income • The prices of related goods • The range of goods available • Consumers' expectations of future prices of the product

  12. Video Khan Academy Change in Expected Future Prices and Demand

  13. Activity 2 Name 3 factors that would shift the demand curve. 1 3 2

  14. Equilibrium • Definition: Equilibrium is where the quantity supplied is equal to the quantity demanded.

  15. Summary • Changes in supply or demand will change the equilibrium price of a product. • Thus, change in the curve or along the curve will be change in equilibrium. • Example

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