SUPPLY

PriceP

Quantity DemandedQd

$9 28 37 56 9

PriceP

Quantity DemandedQd

$9 28 37 56 9P

Q

9

2

8

3

7

5

6

9

D

Qd just a point on thecurve.

is the entirecurve.

To be on thedemand curvea person mustbe WILLINGand ABLE topurchase theproduct or service.

PriceP

Quantity DemandedQd

$9 28 37 56 9P

Q

9

2

8

3

7

5

6

9

D


is the entirecurve.

There is an___________relationshipbetween priceand quantity.

inverse

Q

9

2

8

3

7

5

6

9

D

Quantity demanded--it is the amount that will be purchased at a specific P.

Definitions:

Law of Demand– As price goes down, consumers will buy more!

Q

9

2

8

3

7

5

6

9

D


is the entirecurve.

Price changes Quantity Demanded

Price DOES NOT CHANGEDEMAND!!!!!!!!

Only one variable Qd

PRICEPRICE DOES NOT

DEMAND!!

Eight Determinants of Demand:1. # of consumers2. Income--Normal Goods

3. Income--Inferior Goods

As people’s incomes go up demand fornormal goods increases. As people’s incomego down, demand for normal goods decrease.

As people’s incomes go up demand forinferior goods decreases. As people’s incomego down, demand for inferior goods increases.

With a partner, come up with THREE inferior and THREE

normal goods!

______Used Furniture Store ______Lazy Boy Store

$25


3. Income--Inferior Goods4. Preferences


3. Income--Inferior Goods4. Preferences5. Price of related products: Substitutes


3. Income--Inferior Goods4. Preferences5. Price of related products: Substitutes6. Price of related products: Complements

Eight variables that shift Demand:1. # of consumers2. Income--Normal Goods

3. Income--Inferior Goods4. Preferences5. Price of related products: Substitutes6. Price of related products: Complements7. Expected future P’s by consumers8. Expected future Y (Income) by consumers

What happens to the price of gasoline when consumers think

the price of oil will go up?

• Speculation increases demand!• The price goes up!

What device do consumers use to buy stuff NOW when they expect their future income will increase?

Review

• Law of Demand• P____ Qd _____• P____ Qd _____• P changes _____, not _________.

Your market is:

The price of Coke doubles, what happens to the market for Pepsi?

Increase inprice of related product—Substitute

Pepsi

P

Q

S

D

P

Q

D1

P1

Q1

Your market is:

What happens to the market for downloaded music when the price of an MP3 player or Ipod goes down?

Decrease in the price ofa complement.

Downloaded Music

P

Q

S

D

P

Q

D1

P1

Q1

Your market is:

New market research reveals that corn gives yougas.

Change in onsumerpreference

Corn

P

Q

S

D

P

QD1

P1

Q1

Your market is:

The U.S. goes through a boom economy, whathappens to the market for steak?

Increase inincomes—Normal goods.

Steak

P

Q

S

D

P

Q

D1

P1

Q1

Your market is:

What happens to the market for generic canned goodsWhen there is an income tax increase

Decrease in YInferior good.

Generic canned vegetables

P

Q

S

D

P

Q

D1

P1

Q1

Demand Review

Your market is:

Pitbull comes out with a new ad campaign

Changeinpreferences

Pitbull CD’s

P

Q

S

D

P

Q

D1

P1

Q1

Your market is:

Immigrants leave the state of GA due to newimmigration law

Change in # of consumers

Authentic Hispanic food products

P

Q

S

D

P

QD1

P1

Q1

Your market is:

Recession worsens, whathappens to the market for second hand clothes?

Decrease inincomes—inferior goods.

Second hand clothes

P

Q

S

D

P

Q

D1

P1

Q1

PriceP

Quantity SuppliedQs

$6 27 38 59 9

Q

S

Quantity supplied--it is the amount that will be sold at a specific P.

Definitions:

Law of Supply – Sellers tend to offer more of a good at a higher price!

P

Qs just a point on thecurve.

is the entirecurve.

Price changes Quantity Supplied

Price DOES NOT CHANGESUPPLY!!!!!!!!

Q

SP

Qs just a point on thecurve.

is the entirecurve.

Only one variable Qs

PRICEPRICE DOES NOT

SUPPLY!!

GUESS HOW MANY DETERMINANTS OF SUPPLY THERE ARE?

5And if you don’t memorize these variables, YOUWILL FAIL THIS CLASS!!ARE THERE ANY QUESTIONS?

Five determinants of Supply:1. # of suppliers2. Costs

3. Physical Availability of Resources4. Technology5. Expected Future Prices by Suppliers

Review

• Law of Demand = P Qd ____ = P Qd ____

• Law of Supply = P ___Qs = P ____ Qs

• What variable changes Qd?• What variable changes Qs?

You can MAKE MONEY by knowingthe laws of supply and demand.

Major Drought Hits Brazil

Draw a supply and demand graph showing how I made my money!

Zit’s Coffee Shop (beans and grinds)

Write what happened in flow chart form

You can SAVE MONEY by knowingthe laws of supply and demand.

In English pubs, ale is ordered by pints and quarts. So in old England, when customers got unruly, the bartender would yell at them mind their own pints and quarts and settle down. It's where we get the phrase "mind your P's and Q's"

P

Q

How did the termsP’s and Q’s comeabout?

There are four steps in figuring out supplyand demand graphs:

1. DON’T THINK!

2. Which curve is affected and why?

3. Is it an increase or a decrease?

4. JUST DRAW IT!

Your market is:

What happens to the market for oranges whenthere is a frost that hits Florida?

P

Q

S

D

P

Q

S1

P1

Q1

Decrease inthe physicalavailabilityof resources.

Oranges

Your market is:

What happens to the market for downloadedmusic when the royalties paid to the song artist goes up?

Increase incosts.

Downloaded Music

P

Q

S

D

P

Q

S1

P1

Q1

Your market is:

U.S. automakers use robots to produce its cars, what happens to the market for foreign automobiles?

Price of related product—substitute.

Foreign autos

P

Q

S

D

P

QD1

P1

Q1

Questions for Supply and Demand

Assume that the economy of the country of Alpha is experiencing increasing unemployment. Steak is considered a normal good in Alpha. Using the supply and

demand graph illustrate the impact of the increasing unemployment on the market for steak in Alpha.

Assume that the economy of the country of Alpha is experiencing increasing unemployment. Hamburger is considered an inferior good in Alpha. Using the supply and

demand graph illustrate the impact of the increasing unemployment on the market for hamburger in Alpha.

The country of Alpha experiences an increase in immigration that leads to an additional one million consumers. What will be the affect on this immigration on Grog the popular

drink of Alpha. Illustrate the impact on price and output using a supply and demand graph.

A plague has a devastating impact on the population of Alpha. Illustrate using a supply and demand graph how this will impact the

market for chicken.

Review

• Law of Demand = P Qd ____ = P Qd ____

• Law of Supply = P ___Qd = P ____ Qd

• What variable changes Qd?• What variable changes Qs?

I want to talk about two products for the nextten minutes.

Insulin and Bicycles

Every morning, millions of diabetics give themselves a shot of insulin just to stay alive.

In the U.S., there areover 10 million diabetics,110 million worldwide.

(2001)

Now you say to yourselfagain, so what do insulin and bicycleshave in common?

Diabetics ride bicycles.

P P

Q QInsulin Bicycles

10 m

$1

$2

$3

D

$300

100

$200

200

$100

500

D

P P

Q QInsulin Bicycles

10 m

$1

$2

$3

D

$300

100

$200

200

$100

500

D

One has few substitutes and one has many? Few substitutes Many substitutes

One is a necessity and the other is a luxury? Necessity LuxuryOne is expensive and the other is inexpensive Inexpensive Expensive

INELASTIC ELASTIC

Five (4) tests for figuring elasticity of demand:

I am going to name a product and you letme know if the demand for the product iselastic or inelastic:

PizzaHamburgerGasoline

New HomesCarsCancer drugsChewing gumCorn

Perfectly inelastic; Ed = 0

What is an example?

Inelastic demand; Ed < 1

Why?

Unit Elastic Demand; Ed = 1

Elastic Demand; Ed > 1

Why?

Perfect Elastic Demand; Ed = infinite

REVIEWWhat are the three tests fordetermining elasticity of demand?Elastic (bicycles) Inelastic (insulin)

1. Many substitutes 1. Few substitutes2. Luxury 2. Necessity3. Expensive 3. Inexpensive4. Total revenue test 4. Total revenue test

P goes up, TR goes downP goes down, TR goes up

P goes up, TR goes upP goes down, TR goesdown.

ELASTICITY COEFFICIENT

Elastic (bicycles) Inelastic (insulin)

Ed > 1 Ed < 1

To figure out the coefficient, you must know theformula for Elasticity of Demand… but it is notIn scope for this course!

Ed = 1 is unit elastic

Summary - Elasticity

What is it? What is it not?

Where will I see this word?

What is one word I can use to remember this concept?

Ed = the percentage change in quantity demanded divided by the percentage change in price.

Simplify this formula.

Ed = % in Qd

% in P

% in Qd = in Qd

Qd

Like Levi’s,always usethe original.

% in P = in P

P

Ed = % in Qd

% in P

How do you figure outthe numerator? How do you figure outthe denominator?

Like Levi’s,always usethe original.

NUMERATOR

DENOMINATOR

in Qd

Qd in P

P

Ed =

SIMPLIFY ONE LAST TIME:

Ed = in Qd

Qd in P

P

There are 5 steps in figuring out theelasticity coefficient:

1. Write down the formula.

3. Fill in the ORIGINAL numbers FIRST.

2. DO NOT use negative numbers.

4. Fill in the other two numbers.

5. Know the answer--Ed > 1 ELASTIC Ed < 1 INELASTIC

There are 5 steps in figuring out the elasticity coefficient:

1. Write down the formula. 2. Fill in the ORIGINAL numbers FIRST.


4. Don’t make a STUPID mistake!


P of Widgets Qd

10 09 408 80 7 1206 1605 200

4 2403 2802 320

1 380

What is the elasticitycoefficient going from $2 to $3?






P of Widgets Qd

10 09 408 80 7 1206 1605 200

4 2403 2802 320

1 380







P of Widgets Qd

10 09 408 80 7 1206 1605 200

4 2403 2802 320

1 380







P of Widgets Qd

10 09 408 80 7 1206 1605 200

4 2403 2802 320

1 380


ELASTICITY QUESTIONS

1. Mr. Lopez is a butcher who recently raised the price of steak at his market from $1.50 to $2.00 a pound. Correspondingly, his sales dropped from 200 pounds per day to 100 pounds per day. Figure out the elasticity of demand for steak at Lopez’ market. Is it elastic or inelastic?

in Qd

Qd

P in P

2. At 25 cents apiece, Mr. Blackman sells 100 chocolate bars per week. If he drops his price to 20 cents, his weekly sales will increase to 110 bars. Is the demand for chocolate bars elastic or inelastic? Prove your answer.

in Qd

Qd

P in P

3. Suppose that 30 tons of coal are purchased at a price of $20 per ton and 50 tons are purchased at $15 per ton. What is the elasticity coefficient in this example? If we converted tons to pounds, would the measurement of the elasticity coefficient change?

in Qd

Qd

P in P

Review

• Draw a perfectly inelastic curve. Name one example.

• What is an example of an inelastic good?• What is an example of an elastic good?• Draw a perfectly elastic curve• What are four tests for determining

elasticity? How do you reconcile multiple effects?

P

Q

S

D

P

Q

Fair market price of apartments in NYC is $1,600

$1,600

NYC has rent controls which are price ceilings. Where do you think price CEILINGS are set? BELOW or ABOVE the market price?

Pc

Pc are setBELOW theequilibriumprice.

is the highest pricethat can becharged in themarket.

P

Q

S

D

P

Q

$1,600

Pc

Rent controls are a price set by the government tokeep prices of apartments down. In NYC the government sets the HIGHEST PRICE that can becharged for a one-bedroom apartments at $1,200. Landlords cannot charge above this price.

$1,200

P

Q

S

D

P

Q

$1,600

Pc$1,200

Looking at the graph, what occurs when the price isset BELOW the equilibrium price when a PRICECEILING is set?

The Quantity Demanded > the Quantity Supplied

QdQ<Qs

Anytime Qd > Qs there is a SHORTAGE in the market.

P

Q

S

D

P

Q

$1,600

Pc$1,200

QdQ<Qs

This is the numberof apartments landlordsare willing to supply atthis price (Qs).

This is the number ofpeople willing to rent apartments at this price (Qd).

This is a SHORTAGE.

P

Q

S

D

P

Q

$1,600

Pc$1,200

QdQ<Qs

Do you think people ever pay more than $1200 for an apt in NYC? WHY?

PRICE CEILING—THE HIGHEST PRICE THE SELLER CAN SELL THE PRODUCT.

P

Q

S

D

P

Q

$1,600

Pc$1,200

QdQ<Qs

S

DQs3,000

$50

$0 Pc

In 1975

$169

$69Chicago

Minneapolis

Los Angeles

SanFran.

To fly from Chicago toMinneapolis it cost

To fly from Los Angelesto San Francisco it cost

WHY?

In 1975

$169

$69

Roughly the same number of people were flyingbetween these two destinations and roughly the same number of airplanes were flying these two routes. So why such a difference in the prices of these airfares? What is different between these two routes?

This is INTERSTATEtravel.

This is INTRASTATEtravel. (inside the state)

Chicago

Minneapolis

Los Angeles

SanFran.

P

Q

S

D

P

QInterstate travel was regulated by the Civil Aeronautics Board. It set the prices for flightstraveling across state lines. It set a PRICE FLOOR.

Where is a PRICE FLOOR set? Above or BELOWthe equilibrium price? ABOVE.

Pf

P

Q

S

D

P

Q

Pf

Why is it called a price FLOOR if it is set ABOVEthe equilibrium/market price?

Because it is the LOWEST price that can be chargedby law.

P

Q

S

D

P

Q

Pf

Which route is the market price and which routeis the PRICE FLOOR?

The market price is $69, the price charged betweenLos Angeles and San Francisco.

$69

The PRICE FLOOR is $169, the price charged between Chicago and Minneapolis.

$169

$69

$169

P

Q

S

D

P

Q

Pf

$69

$169Whenever there isa PRICE FLOORthe QuantitySupplied isgreater than theQuantity Demanded.

QsQd <

$69

$169

P

Q

S

D

P

Q

Pf

$69

$169

A price floorcauses a SURPLUSin the market.

QsQd <

$69

$169

Qd ofseats

Qs ofseats<

P

Q

S

D

P

Q

Pf

$69

$169

QsQd <

What price did the airlines charge customer flyingfrom Chicago to Minneapolis? $169

If airlines couldn’t compete by price since theyall charged the same price, how did airlines compete?

Service: Best food, bigger seats, prettiest flightattendants.

Surplus of seats available becauseof the price floor.

http://www.1jetsettravel.com/Picts/22Plncbn.jpg http://www.transport-pf.or.jp/english/sky/airplane/exploration/img/jal-mesi.jpg

Airlines competed byserving better food.

Prettiest stewardess

As deregulation of the airline industry tookplace in 1978, what happened to the pricefloor?

P

Q

S

D

P

Q

Pf

$69

$169

QsQd

The price floor is eliminated, lowering the price to the market price. This gets rid of the surplus. People get to fly for lower prices, but the airplanes are now more crowded.

Summary

• Draw a graph showing the minimum wage– What does it do to unemployment?– Should we still have a minimum wage law?– Why or why not?

What type of products do they target for excise taxes?

*The Federal Tax of 18.4 cents per gallon is collected in all states in

addition to any state or local taxes on gasoline sales.

State Tax/Cents per gallon* State Tax/Cents per

Gallon*Alabama 18 Montana 27.75Alaska 8 Nebraska 24.6Arizona 18 Nevada 23Arkansas 21.5 New

Hampshire 18California 18 New Jersey 14.5Colorado 22 New Mexico 17Connecticut 25 New York 29.65

Delaware 23 North Carolina 23.4Dist. of Columbia 20 North Dakota 21Florida 14.1 Ohio 22Georgia 7.5 Oklahoma 17Hawaii 16 Oregon 24Idaho 25 Pennsylvania 25.9Illinois 19 Rhode Island 30

Indiana 18 South Carolina 16Iowa 20.1 South Dakota 22Kansas 23 Tennessee 20Kentucky 15 Texas 20

Kansas 23 Tennessee 20Kentucky 15 Texas 20Louisiana 20 Utah 24.5Maine 22 Vermont 20Maryland 23.5 Virginia 17.5Massachusetts 21.5 Washington 23Michigan 19 West Virginia 20.5Minnesota 20 Wisconsin 31.1Mississippi 18 Wyoming 14Missouri 17 Federal Tax

Rate 18.4

Telephone?

This tax adds three percent to the cost of the telephone bill of consumers. If a consumer has a monthly bill for local and long-distance service totaling $100, an additional $3 is applied to the bill with the result that the consumer must pay $103, although the actual charge for service amounted to $100.In fiscal year 1999, the telephone excise tax

provided $5.2 billion to the Federal Treasury.

Cigarettes?

Current Cigarette Excise Tax Rates

Current State Cigarette Tax Average: $1.069 per pack

Sorted By Tax Rate Sorted By Tax Rate

Sorted By State Name

StateTax Rate

(per pack of 20)New Jersey $2.575Rhode Island $2.460Washington $2.025Alaska $2.000Maine $2.000Arizona $2.000Michigan $2.000Connecticut $2.000Vermont $1.790Montana $1.700Hawaii $1.600South Dakota $1.530Massachusetts $1.510New York $1.500Minnesota $1.490Texas $1.410Iowa $1.360Pennsylvania $1.350Ohio $1.250

Pennsylvania $1.350Ohio $1.250Oregon $1.180Delaware $1.150New Hampshire $1.080Oklahoma $1.030Maryland $1.000District of Columbia $1.000

Indiana $0.995Illinois $0.980New Mexico $0.910California $0.870Colorado $0.840Nevada $0.800Kansas $0.790Wisconsin $0.770Utah $0.695Nebraska $0.640Tennessee $0.620Wyoming $0.600Arkansas $0.590Idaho $0.570West Virginia $0.550North Dakota $0.440Alabama $0.425Georgia $0.370Louisiana $0.360North Carolina $0.350Florida $0.339Kentucky $0.300Virginia $0.300

Oklahoma $1.030Maryland $1.000District of Columbia

$1.000

Indiana $0.995Illinois $0.980New Mexico $0.910California $0.870Colorado $0.840Nevada $0.800Kansas $0.790Wisconsin $0.770Utah $0.695Nebraska $0.640Tennessee $0.620Wyoming $0.600Arkansas $0.590Idaho $0.570West Virginia $0.550North Dakota $0.440Alabama $0.425Georgia $0.370Louisiana $0.360North Carolina $0.350Florida $0.339Kentucky $0.300Virginia $0.300Mississippi $0.180Missouri $0.170South Carolina $0.070

Alabama $1.70 Yes

Alaska 2.50 n.a.

Arizona 0.84 Yes

Arkansas 0.75 Yes

California 0.20 Yes

Colorado 0.32 Yes

Connecticut 0.60 Yes

Delaware 0.97 n.a.

Florida 2.25 Yes

Georgia 1.51 Yes

Wine Tax

Weird Taxes

Federal Excise Taxes

http://money.cnn.com/2003/01/06/pf/taxes/q_oddtaxes/

http://www.taxfoundation.org/exciseratesfed.html

A police chief of a major city stated the following:

“There is 20 percent less heroin coming intothe city. This means there will be fewerdrug-related crimes.”

Draw a supply and demand graph for heroinand show the fallacy in this thinking.

Each batter will get the board and draw a supply and demand graph.

S

D

P

Q

The umpire (Mr. Zittle) will give you the market; write it at the bottom of the supply and demand graph.

S

D

P

Q

Sample Inning:Your market is: Baseball tickets

Baseball Tickets

Your questions is: The town size has doubled in the past year, what will most likely happen to the price and quantity of baseball tickets?1. Don’t think!2. Which curve is affected?

3. Is it an increase or a decrease with that curve?

4. Just draw it!Demand because the number of consumers .Price and quantity

D1

P1

Q1

1st Inning

Your market is: Paper Plates

Your question: Millions of acres of forest landare burned. What happens tothe market for paper plates?

P

Q

S

D

P

Q

S1

P1

Q1

Paper Plates

Answer:Costs

Supply shiftsto the left.P Q

1st inning

Millions of acres of forest land are burned. What happens to the market for paper plates?

2nd Inning

Your market is: Most goods and services

Your question: Gas prices go up in the economy. What happens tothe market for most goods and services?

2nd Inning

P

Q

S

D

P

Q

S1

P1

Q1

G & S

Answer:


Gas prices go up in the economy. What happens tothe market for most goods and services?

Availability of natural resources

3rd Inning

Your market is: Doctors

Your question: The medical exam to becomea doctor becomes moredifficult. What happens to the market for doctors?

3rd Inning

P

Q

S

D

W

Q

S1

W1

Q1

Doctors

Answer:Number of suppliers

Supply shiftsto the left.W Q

The medical exam to becomea doctor becomes moredifficult. What happens to the market for doctors?

4th Inning

Your market is: Walgreens Aspirin

Your question: The price of Bayeraspirin goes down. Whathappens to the market forWalgreens Aspirin?

4th InningP

Q

S

D

P

Q

D1

P1

Q1

Walgreens Aspirin

Answer:

Price of a substitute(Bayer)

Demand shifts tothe leftP Q

The price of Bayeraspirin goes down. What happens to the market forWalgreens Aspirin?

5th Inning

Your market is: New houses in Ohio

Your question: Millions of acres of timberlandin Oregon are burned. What happens to the market for new houses in Ohio?

5th InningP

Q

S

D

P

Q

S1

P1

Q1

New houses in Ohio

Answer:costs


Millions of acres of timberland in Oregonis burned. What happens tothe market for new houses in Ohio?

6th Inning

Your market is: Clothes in secondhand stores

Your question: The economy starts goingthrough a boom period. Whathappens to the market forclothing in secondhand stores?

6th InningP

Q

S

D

P

QD1

P1

Q1

Clothing in secondhand store

Answer:Income inferior goods

Demand shiftsto the left.P Q

The economy starts going through a boom period. Whathappens to the market for clothing in second-hand stores?

Alternative answer next slide.

6th InningP

Q

S

D

P

Q

S1

P1

Q1

Clothing in secondhand store

Answer:Physical availabilityof resources (clothes)

Supply shifts tothe right.P Q

The economy starts going through a boom period. Whathappens to the market for clothing in second-hand stores?

Alternative answer

7th Inning

Your market is: Houses

Your question: Interest rates go up. What happens to themarket for houses?

7th InningP

Q

S

D

P

QD1

P1

Q1

Houses

Answer:preferences

Demand shiftsto the left.P Q Alternative answer next slide.

Interest rates for go up. What happens to themarket for houses?

7th InningP

Q

S

D

P

Q

S1

P1

Q1

Houses

Answer:Cost of buildinghomes goes up.Supply shiftsto the left.

P Q Alternative answer

Interest rates for mortgages go up. What happens to themarket for houses?

8th Inning

Your market is: Copper piping

Your question: Millions of acres of timberlandare burned. What happens tothe market for copper piping?

Draw three supply and demandgraphs with the last one beingthe market for copper piping.You figure out what the othertwo supply and demand graphsshould be.

8th InningP

Q

S

D

P

Q

S1

P1

Q1

Wood

Answer:

Physical availabilityof wood.


Millions of acres of timberland are burned. What happens tothe market for copper piping?

8th InningP

Q

S

D

P

Q

S1

P1

Q1

Houses

Answer:

Cost of building

Supply shiftsto the left.

P Q


8th InningP

Q

S

D

P

QD1

P1

Q1

Copper Piping

Answer:Price of a complement(copper pipes complement a house)

Demand shiftsto the left.

P Q


AP 9th inning

All team members to the board andDO NOT draw anything on the board

until I read the question.

This statement came out in the school announcements:

“The yearbook staff only order 350 yearbooksfor this year. Due to this shortage, the price of the yearbook will be raised from $28 to $30. If you would like to buy a yearbook, please stopby the business office.”

Draw a graph of what this statement is saying.

AP 9th Inning

S

D

YearbooksQ

P

$28

QdQs

$30

9th InningP

Q

S

D

P

Q

D1

P1

Q1

Demand for most G&S

Answer:Expectations of future Y

Demand shifts tothe right.P Q

Public opinion pollsshow the economywill improve in the shortterm

P

Q

S

D

P

Q

D1

P1

Q1

Increase in demand

Increase in supply

S

Q1

Quantitywill definitelyincrease.Price isIndeterminate

It will eithergo up.

P1

PS

D

P

Q

D1

P1

Q1

Increase in demand

Increase in supply

S

Q1


It stayed thesame.

P1

PS

D

P

Q

D1

P1

Q1

Increase in demand

Increase in supply

S

Q1


It went down.

P1

What happens to the price and quantity if thereis an increase in demand and a decrease in supply?

Price definitely goes up; Quantity is indeterminate

What happens to the price and quantity if thereis a decrease in demand and an increase in supply?

Price definitely goes down; Quantity is indeterminate

What happens to the price and quantity if thereis a decrease in demand and an decrease in supply?

Price is indeterminate; Quantity will definitely decrease

SUPPLY

Documents

future income

determinants of demand

price of gasoline

price of oil

steakpqsdpqd1p1q1your

demand fornormal goods

demand forinferior goods

normal goods3