Econ 4 Files
Econ 4 Lecture
Notes
Lecture 8: Supply and Demand, Part 3
 |
Economics 2 |
Lecture 8: Supply and Demand, Part 3
things that shift the demand curve (continued)
changes in supply
things that shift the supply curve
Things that Shift the Demand Curve (continued)
A change in the price of a good causes a movement along the demand curve for that good. The quantity demanded changes but demand there is no change in demand. A change in anything else that effects the demand for the good causes the demand curve to shift, that is, causes demand to increase or decrease.
- changes in tastes/preferences
- changes in income
- changes in the prices of related goods
- complements - goods that are usually consumed together
price of good A 
demand for good B decreases
price of good A demand for good B increases
- substitutes - one good can take the place or function of another
- price of good A demand for good B increases
- price of good A demand for good B decreases
- complements - goods that are usually consumed together
- changes in the number of potential buyers
- more buyers demand increases
- fewer buyers demand decreases
- more buyers
- changes in expectations of future prices
- expect higher price demand increases now
- expect lower price demand decreases now
- expect higher price
Changes in Supply
An increase in the price of a good (due, say, to an increase in demand) has no effect on the supply curve. A change in the price of a good causes a movement along the supply curve. A change in anything else that effects supply causes the supply curve to shift.
| When the amount firms are willing to offer for sale goes up at all possible prices, the supply curve shifts down to the right. This is an increase in supply. |  |
| When the amount firms are willing to offer for sale falls for all possible prices, the supply curve shifts up to the left. This is an decrease in supply. |  |
Things that Shift the Supply Curve
A change in the price of a good causes a movement along the supply curve for that good. The quantity supplied changes but supply is unchanged. A change in anything else that effects the supply for the good causes the supply curve to shift.
- changes the costs of inputs
- higher costs supply decreases
- lower costs supply increases
- higher costs
- new technology
- new technology supply increases
- new technology
- weather and other "Acts of God"
- adverse supply decreases
- beneficial supply increases
- adverse
- changes the number of sellers
- more sellers supply increases
- fewer sellers supply decreases
- more sellers
- changes in expectations of future prices
- expect higher price supply decreases now
- expect lower price supply increases now
- expect higher price
- changes in the prices of related goods
- substitutes in production - firms can easily switch from producing one item to
the other
- price of good A supply of good B decreases
- price of good A supply of good B increases
- joint products - goods that are normally produced together
- price of good A supply of good B increases
- price of good A supply of good B decreases
- substitutes in production - firms can easily switch from producing one item to
the other
 |
David A. Latzko Business and Economics Division Pennsylvania State University, York Campus office: 13 Main Classroom Building phone: (717) 771-4115 fax: (717) 771-4062 e-mail: 
web: www.yk.psu.edu/~dxl31 |
 |