Shifts in the Demand CurveIncrease in demand results in any change that increases the quantity demanded at every price. Demand curve shifts right.Decrease in demand results in any change that decreases the quantity demanded at every price. Demand curve shifts left

Law of demand(Other things equal) When the price of the good rises, the quantity demanded falls Quantity demandedAmount of a good that buyers are willing and able to purchase

IncomeNormal goods=demand falls when income falls= result in an increase in income leads to an increase in demand (beer). Inferior goods=demand rises when income falls= result in an increase in income leads to a decrease in demand (bus rides).Related Goods2 goodsSubstitutes=an increase in the price of one, leads to an increase in the demand for the other (Pepsi vs. coke). Complements=an increase in the price of one, leads to a decrease in the demand for the other (pb&j).Expectations about the futurewhen you expect an increase in income or expect higher prices, there WILL be an Increase in CURRENT demand.

Quantity suppliedAmount of a good that sellers are willing and able to sell.

Law of supply(other things equal) When the price of the good rises, the quantity supplied of a good rises.

Shifts in supplyIncrease in supply results in any change that increases the quantity supplied at every price. Supply curve shifts right.Decrease in supply results in any change that decreases the quantity supplied at every price. Supply curve shifts left.

Figure 313 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Shifts in the Demand Curve

Price of Ice-Cream Cones Quantity of Ice-Cream Cones 0Demand curve, D1Demand curve, D3Demand curve, D2Increase inDemand Decrease inDemand Any change that raises the quantity that buyers wish to purchase at any given price shifts the demand curve to the right. Any change that lowers the quantity that buyers wish to purchase at any given price shifts the demand curve to the left.

Demand Variables that can shift the demand curveIncomePrices of related goodsTastesExpectationsNumber of buyers: increased buyers will increase market demands14 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Figure 524 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Bens Supply Schedule and Supply CurvePrice ofIce-creamConeQuantity Of ConesSupplied$0.000.501.001.502.002.503.000 cones012345

Supply curveThe supply schedule is a table that shows the quantity supplied at each price. This supply curve, which graphs the supply schedule, illustrates how the quantity supplied of the good changes as its price varies. Because a higher price increases the quantity supplied, the supply curve slopes upward.0121011912345678Quantity of Ice-Cream Cones $3.002.502.001.501.000.50Price of Ice-Cream Cones

1. An increasein price . . .2. . . . increases quantity of cones supplied.

Figure 627 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Market Supply as the Sum of Individual Supplies

SBen01234567Quantity of Ice-Cream Cones $3.002.502.001.501.000.50Price ofIce-CreamCones

Bens supply

SJerry01234567Quantity of Ice-Cream Cones $3.002.502.001.501.000.50Price ofIce-CreamCones

Jerrys supply+=

SMarket018246810121416Quantity of Ice-Cream Cones $3.002.502.001.501.000.50Price ofIce-CreamCones

Market supply

Exhibit 729 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Shifts in the Supply Curve

Price of Ice-Cream Cones Quantity of Ice-Cream Cones 0Supply curve, S1Supply curve, S3Supply curve, S2Increase inSupply DecreaseIn supplyAny change that raises the quantity that sellers wish to produce at any given price shifts the supply curve to the right. Any change that lowers the quantity that sellers wish to produce at any given price shifts the supply curve to the left.

Supply Variables that can shift the supply curveInput Prices: higher prices will decrease supplies. (-) related to prices of inputsTechnology: advancements will increase supplies.Expectations about future: Only affect current supply. Expected higher prices will decrease the current supplies. Number of sellers: Increased sellers will increase the market supply.30 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Figure 18 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Catherines Demand Schedule and Demand Curve

Demand curveThe demand schedule is a table that shows the quantity demanded at each price. The demand curve, which graphs the demand schedule, illustrates how the quantity demanded of the good changes as its price varies. Because a lower price increases the quantity demanded, the demand curve slopes downward.Price ofIce-CreamConeQuantity ofConesDemanded$0.000.501.001.502.002.503.0012 cones1086420

0121011912345678Quantity of Ice-Cream Cones $3.002.502.001.501.000.50Price of Ice-Cream Cones

1. A decreasein price . . .2. . . . increases quantityof cones demanded.

Figure 211 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Market Demand as the Sum of Individual Demands

DCatherine0121011912345678Quantity of Ice-Cream Cones $3.002.502.001.501.000.50Price ofIce-CreamCones

Catherines demand

DNicholas01234567Quantity of Ice-Cream Cones $3.002.502.001.501.000.50Price ofIce-CreamCones

Nicholass demand+=

DMarket018246810121416Quantity of Ice-Cream Cones $3.002.502.001.501.000.50Price ofIce-CreamCones

Market demand