Econ: Graphing Supply and Demand Review

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Demand and supply are the two forces that make market based economies work.

• The law of demand states that as the price of a good or service increases, the quantity demanded decreases. As the price decreases, the quantity demanded increases. The inverse relationship of quantity demanded and price can be shown in a demand schedule and graphed as a demand curve.
• Demand in a market changes when quantities demanded at all prices increase or decrease. On a graph, a change in demand causes the demand curve to shift. Significant demand shifters include popularity, complementary goods, consumer expectations, size of consumer market, income, and substitute goods.
• The law of supply states that as the price of a good or service increases, the quantity supplied increases. As the price decreases, the quantity supplied decreases. The direct relationship of quantity supplied and price cam be shown in a supply schedule and graphed as a supply curve.
• Supply in the market changes when quantities supplied at all prices increase or decrease. On a graph, a change in supply causes the supply curve to shift. Significant supply shifters include subsidies and taxes, new technology, other conditions, cost of resource inputs, producer expectations, and size of producer market.

In a free market, demand and supply automatically move prices to equilibrium, the point at which quantity demanded equals quantity supplied.

• Demand and supply interact to drive prices for goods and services to the equilibrium level. On a graph, the equilibrium point is found at the intersection of the demand and supply curves. The equilibrium price, also known as the market clearing price, may be thought as the “right” price.
• Disequilibrium occurs when prices are set above or below the equilibrium price. When prices are too low, excess demand leads to shortages. When prices are too high, excess supply leads to surpluses.
• Many kinds of events can cause demand and supply curves to shift to the right or left. Markets adjust to such changed conditions by seeking a new equilibrium point.
• Governments sometimes implement price controls when prices are considered unfairly high for consumers or unfairly low for producers. Price floors, such as minimum wage laws, prevent prices from going too low, but lead to excess supply. Price ceilings, such as rent control laws, prevent prices from going too high, but lead to shortages.

Econ: More Graphing Supply Demand and Equilibrium

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Graphing supply and demand, changes in quantity supplied and quantity demanded, changes in supply (STORES) and demand (TOESIS), and changes in equilibrium price and quantity.

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Homework:
6.6 How Does Government Intervention Affect Markets (read pp.112-115)

Econ: Graphing Supply Demand and Equilibrium

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Graphing supply and demand, changes in quantity supplied and quantity demanded, changes in supply (STORES) and demand (TOESIS), and changes in equilibrium price and quantity.

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Homework:
6.4 How Do Shifts in Demand or Supply Affect Markets (read pp.105-108)
6.5 What Roles Do Prices Play in a Modern Mixed Economy (read pp.108-111)

 

Econ: Graphing Change in Supply or Demand and Equilibrium

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A market moves to a new equilibrium when there is a shift in either supply (STORES) or demand (TOESIS) which changes the equilibrium price and quantity.

• Demand increases = price increases and quantity increases
• Demand decreases = price decreases and quantity decreases
• Supply increases = price decreases and quantity increases
• Supply decreases = price increases and quantity decreases

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Homework:
6.4 How Do Shifts in Demand or Supply Affect Markets (read pp.105-108)

APMacro: Supply and Demand Graphing Practice

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A market moves to a new equilibrium when there is a shift in either supply (STORES) or demand (TOESIS) which changes the equilibrium price and quantity.

 

A change in quantity demanded is a movement along the demand curve and can be caused only by a change in the price of the good or service. A change in demand is a shift in the curve whereby more or less is demanded at every price. Changes in preferences incomes, expectations, population, or the prices of complementary or substitute goods will cause a change in demand.

Demand increases = price increases and quantity increases
Demand decreases = price decreases and quantity decreases
 

 

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A change in quantity supplied is a movement along the supply curve and can be caused only by a change in the price of the good or service. A change in supply is a shift of the curve whereby more or less is supplied at every price. A change in government action, technology, in production costs, expectations, or in the number of sellers (firms) will cause a change in supply.

Supply increases = price decreases and quantity increases
Supply decreases = price increases and quantity decreases

 

 

 

Econ: Supply and Demand Graphing Quiz

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Supply and demand quiz.  Good luck!

law of demand
law of supply
demand determinants
supply determinants
elastic
inelastic
equilibrium
market price
market quantity
surplus
shortage
price ceiling
price floor

Econ: Graphing Supply and Demand Review

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Review for supply and demand. Graphing supply and demand, changes in supply (STORES) and demand (TOESIS), and changes in equilibrium price and quantity.

 

 

 

 

 

 

Econ: Practice Graphing Supply and Demand

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A market moves to a new equilibrium when there is a shift in either supply (STORES) or demand (TOESIS) which changes the equilibrium price and quantity.

 

A change in quantity demanded is a movement along the demand curve and can be caused only by a change in the price of the good or service. A change in demand is a shift in the curve whereby more or less is demanded at every price. Changes in preferences incomes, expectations, population, or the prices of complementary or substitute goods will cause a change in demand.

Demand increases = price increases and quantity increases
Demand decreases = price decreases and quantity decreases
 

 

.

 

A change in quantity supplied is a movement along the supply curve and can be caused only by a change in the price of the good or service. A change in supply is a shift of the curve whereby more or less is supplied at every price. A change in government action, technology, in production costs, expectations, or in the number of sellers (firms) will cause a change in supply.

Supply increases = price decreases and quantity increases
Supply decreases = price increases and quantity decreases