Part A: DEMAND CURVE SHIFTERS
Part A: DEMAND CURVE SHIFTERS: a. As number of
buyers increases, demand curve shifts to the RIGHT
b. As income of the consumers increases, demand curve for normal goods (goods that you will consumer more of if your income increases) shifts to the RIGHT c. As income of the consumers increases, demand curve for inferior goods (goods that you will consume less of if your income increases (ex. Mac and cheese) shifts to the LEFT d. As people’s taste change in favour of the good, demand curve shifts to the RIGHT e. As the price of a substitute good increases, demand curve shifts to the RIGHT f.
As the price of a complementary good increases, demand curve shifts to the LEFT
g. Expectation can also shift the demand curve LEFT
D
D’
D’ D’
Movement along the curve
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PART B: SUPPLY CURVE SHIFTERS: a. As the number of sellers increases, supply curve shifts to the RIGHT b. As input price decreases, supply curve shifts to the RIGHT c. As technology improves, supply curve shifts to the RIGHT d. As the price of a substitute good in production increases, the supply curve of the good itself shifts to the LEFT e. As the price of a complement good in production increases, supply curve shifts to the RIGHT f.
As sellers expect the future price of the good to be higher, supply curve for the current period shifts to the RIGHT
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PART C: Market Equilibrium:
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PART D: Solving for EQM price and quantity mathematically:
Demand Equation: quantity demanded = Supply Equation:
PART E: Finding EQM price and quantity from a numerical table:
Price of lattes
Quantity of lattes demanded
Quantity of lattes supplied
$0.00
16
0
1.00
14
3
2.00
12
6
3.00
10
9
4.00
8
12
5.00
6
15
6.00
4
18
P* = Q* =
If a decrease in income of the consumers reduces their quantity demanded at each price by 50%, what is the new eqm price and quantity?
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PART F: Predicting Change in EQM price & quantity: 1. Increase in Demand: If there is an increase in demand, demand curve
shifts to the……………………… and the eqm price………………………..& eqm quantity………………………… 2. Decrease in Demand: If there is a decrease in demand, demand curve
shifts to the……………………… and the eqm price………………………..& eqm quantity…………………………
3. Increase in Supply: If there is an increase in supply, supply curve shifts
to the……………………… and the eqm price………………………..& eqm quantity………………………… 4. Decrease in Supply: If there is a decrease in supply, supply curve shifts
to the……………………… and the eqm price………………………..& eqm quantity…………………………
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5. Increase in Demand & Increase in Supply: If there is an Increase in
Demand & Increase in Supply, and the eqm price………………………………..……..& eqm quantity………………………………………………………. 6. Decrease in Demand & Decrease in Supply: If there is a decrease in
Demand & decrease in Supply, and the eqm price………………………….. …………..……..& eqm quantity……………………………………………………….
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7. Increase in Demand & Decrease in Supply: If there is an increase in
Demand & decrease in Supply, and the eqm price………………………….. …………..……..& eqm quantity………………………………………………………. 8. Decrease in Demand & Increase in Supply: If there is a decrease in
Demand & an increase in Supply, and the eqm price…………………………..…………..……..& eqm quantity……………………………………………………….
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buyers increases, demand curve shifts to the RIGHT
b. As income of the consumers increases, demand curve for normal goods (goods that you will consumer more of if your income increases) shifts to the RIGHT c. As income of the consumers increases, demand curve for inferior goods (goods that you will consume less of if your income increases (ex. Mac and cheese) shifts to the LEFT d. As people’s taste change in favour of the good, demand curve shifts to the RIGHT e. As the price of a substitute good increases, demand curve shifts to the RIGHT f.
As the price of a complementary good increases, demand curve shifts to the LEFT
g. Expectation can also shift the demand curve LEFT
D
D’
D’ D’
Movement along the curve
FTR,FALL2011
Page 1
PART B: SUPPLY CURVE SHIFTERS: a. As the number of sellers increases, supply curve shifts to the RIGHT b. As input price decreases, supply curve shifts to the RIGHT c. As technology improves, supply curve shifts to the RIGHT d. As the price of a substitute good in production increases, the supply curve of the good itself shifts to the LEFT e. As the price of a complement good in production increases, supply curve shifts to the RIGHT f.
As sellers expect the future price of the good to be higher, supply curve for the current period shifts to the RIGHT
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PART C: Market Equilibrium:
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PART D: Solving for EQM price and quantity mathematically:
Demand Equation: quantity demanded = Supply Equation:
PART E: Finding EQM price and quantity from a numerical table:
Price of lattes
Quantity of lattes demanded
Quantity of lattes supplied
$0.00
16
0
1.00
14
3
2.00
12
6
3.00
10
9
4.00
8
12
5.00
6
15
6.00
4
18
P* = Q* =
If a decrease in income of the consumers reduces their quantity demanded at each price by 50%, what is the new eqm price and quantity?
FTR,FALL2011
Page 4
PART F: Predicting Change in EQM price & quantity: 1. Increase in Demand: If there is an increase in demand, demand curve
shifts to the……………………… and the eqm price………………………..& eqm quantity………………………… 2. Decrease in Demand: If there is a decrease in demand, demand curve
shifts to the……………………… and the eqm price………………………..& eqm quantity…………………………
3. Increase in Supply: If there is an increase in supply, supply curve shifts
to the……………………… and the eqm price………………………..& eqm quantity………………………… 4. Decrease in Supply: If there is a decrease in supply, supply curve shifts
to the……………………… and the eqm price………………………..& eqm quantity…………………………
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5. Increase in Demand & Increase in Supply: If there is an Increase in
Demand & Increase in Supply, and the eqm price………………………………..……..& eqm quantity………………………………………………………. 6. Decrease in Demand & Decrease in Supply: If there is a decrease in
Demand & decrease in Supply, and the eqm price………………………….. …………..……..& eqm quantity……………………………………………………….
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7. Increase in Demand & Decrease in Supply: If there is an increase in
Demand & decrease in Supply, and the eqm price………………………….. …………..……..& eqm quantity………………………………………………………. 8. Decrease in Demand & Increase in Supply: If there is a decrease in
Demand & an increase in Supply, and the eqm price…………………………..…………..……..& eqm quantity……………………………………………………….
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