微觀經(jīng)濟學(xué)原理曼昆英文第四章課件

TheMarketForcesof

SupplyandDemandEconomicsPRINCIPLESOFN.GregoryMankiw4TheMarketForcesof

SupplyaInthischapter,

lookfortheanswerstothesequestions:Whatfactorsaffectbuyers’demandforgoods?Whatfactorsaffectsellers’supplyofgoods?Howdosupplyanddemanddeterminethepriceofagoodandthequantitysold?Howdochangesinthefactorsthataffectdemandorsupplyaffectthemarketpriceandquantityofagood?Howdomarketsallocateresources?1Inthischapter,

lookforthe1MarketsandCompetitionAmarketisagroupofbuyersandsellersofaparticularproduct.Acompetitivemarketisonewithmanybuyersandsellers,eachhasanegligibleeffectonprice.Inaperfectlycompetitivemarket:AllgoodsexactlythesameBuyers&sellerssonumerousthatnoonecanaffectmarketprice–eachisa“pricetaker”Inthischapter,weassumemarketsareperfectlycompetitive.02THEMARKETFORCESOFSUPPLYANDDEMANDMarketsandCompetitionAmarkeDemandThequantitydemandedofanygoodistheamountofthegoodthatbuyersarewillingandabletopurchase.Lawofdemand:theclaimthatthequantitydemandedofagoodfallswhenthepriceofthegoodrises,otherthingsequal03THEMARKETFORCESOFSUPPLYANDDEMANDDemandThequantitydemandedofTheDemandScheduleDemandschedule:

atablethatshowstherelationshipbetweenthepriceofagoodandthequantitydemandedExample:

Helen’sdemandforlattes.Price

oflattesQuantity

oflattesdemanded$0.00161.00142.00123.00104.0085.0066.004NoticethatHelen’spreferencesobeythe

LawofDemand.04THEMARKETFORCESOFSUPPLYANDDEMANDTheDemandScheduleDemandschePriceofLattesQuantityofLattesHelen’sDemandSchedule&CurvePrice

oflattesQuantity

oflattesdemanded$0.00161.00142.00123.00104.0085.0066.00405THEMARKETFORCESOFSUPPLYANDDEMANDPriceofLattesQuantityofLatMarketDemandversusIndividualDemandThequantitydemandedinthemarketisthesumofthequantitiesdemandedbyallbuyersateachprice.SupposeHelenandKenaretheonlytwobuyersintheLattemarket.(Qd=quantitydemanded)46810121416Helen’sQd

2345678Ken’sQd

++++====691215+=18+=21+=24MarketQd

$0.006.005.004.003.002.001.00Price06MarketDemandversusIndividua6PQTheMarketDemandCurveforLattesPQd(Market)$0.00241.00212.00183.00154.00125.0096.00607THEMARKETFORCESOFSUPPLYANDDEMANDPQTheMarketDemandCurveforDemandCurveShiftersThedemandcurveshowshowpriceaffectsquantitydemanded,otherthingsbeingequal.These“otherthings”arenon-pricedeterminantsofdemand(i.e.,thingsthatdeterminebuyers’demandforagood,otherthanthegood’sprice).ChangesinthemshifttheDcurve…08THEMARKETFORCESOFSUPPLYANDDEMANDDemandCurveShiftersThedemanDemandCurveShifters:#ofBuyersIncreasein#ofbuyers

increasesquantitydemandedateachprice,shiftsDcurvetotheright.09THEMARKETFORCESOFSUPPLYANDDEMANDDemandCurveShifters:#ofBPQSupposethenumberofbuyersincreases.Then,ateachP,

Qdwillincrease

(by5inthisexample).0DemandCurveShifters:#ofBuyers10THEMARKETFORCESOFSUPPLYANDDEMANDPQSupposethenumberofbuyersDemandforanormalgoodispositivelyrelatedtoincome.Increaseinincomecauses

increaseinquantitydemandedateachprice,shiftsDcurvetotheright. (Demandforaninferiorgoodisnegativelyrelatedtoincome.AnincreaseinincomeshiftsDcurvesforinferiorgoodstotheleft.)DemandCurveShifters:Income011THEMARKETFORCESOFSUPPLYANDDEMANDDemandforanormalgoodispoTwogoodsaresubstitutesif

anincreaseinthepriceofone

causesanincreaseindemandfortheother.Example:pizzaandhamburgers.

Anincreaseinthepriceofpizza

increasesdemandforhamburgers,

shiftinghamburgerdemandcurvetotheright.Otherexamples:CokeandPepsi,

laptopsanddesktopcomputers,

CDsandmusicdownloadsDemandCurveShifters: Pricesof RelatedGoods012THEMARKETFORCESOFSUPPLYANDDEMANDTwogoodsaresubstitutesif

Twogoodsarecomplementsif

anincreaseinthepriceofone

causesafallindemandfortheother.Example:computersandsoftware.

Ifpriceofcomputersrises,peoplebuyfewercomputers,andthereforelesssoftware.

Softwaredemandcurveshiftsleft.Otherexamples:collegetuitionandtextbooks,

bagelsandcreamcheese,eggsandbaconDemandCurveShifters: Pricesof RelatedGoods013THEMARKETFORCESOFSUPPLYANDDEMANDTwogoodsarecomplementsif

Anythingthatcausesashiftintastestowardagoodwillincreasedemandforthatgood

andshiftitsDcurvetotheright.Example:

TheAtkinsdietbecamepopularinthe’90s,

causedanincreaseindemandforeggs,

shiftedtheeggdemandcurvetotheright.DemandCurveShifters:Tastes014THEMARKETFORCESOFSUPPLYANDDEMANDAnythingthatcausesashiftiExpectationsaffectconsumers’buyingdecisions.Examples:Ifpeopleexpecttheirincomestorise,

theirdemandformealsatexpensiverestaurantsmayincreasenow.Iftheeconomysoursandpeopleworryabouttheirfuturejobsecurity,demandfornewautosmayfallnow.DemandCurveShifters:Expectations015THEMARKETFORCESOFSUPPLYANDDEMANDExpectationsaffectconsumers’Summary:VariablesThatInfluenceBuyersVariable Achangeinthisvariable…Price …causesamovement

alongtheDcurve#ofbuyers …shiftstheDcurveIncome …shiftstheDcurvePriceof

relatedgoods …shiftstheDcurveTastes …shiftstheDcurveExpectations …shiftstheDcurve016THEMARKETFORCESOFSUPPLYANDDEMANDSummary:VariablesThatInfluA. ThepriceofiPodsfallsB. ThepriceofmusicdownloadsfallsC. ThepriceofCDsfallsACTIVELEARNING1

DemandCurve17Drawademandcurveformusicdownloads.Whathappenstoitineachof

thefollowingscenarios?Why?A. ThepriceofiPodsfallsAC17SupplyThequantitysuppliedofanygoodistheamountthatsellersarewillingandabletosell.Lawofsupply:theclaimthatthequantitysuppliedofagoodriseswhenthepriceofthegoodrises,otherthingsequal018THEMARKETFORCESOFSUPPLYANDDEMANDSupplyThequantitysuppliedofTheSupplyScheduleSupplyschedule:

Atablethatshowstherelationshipbetweenthepriceofagoodandthequantitysupplied.Example:

Starbucks’supplyoflattes.NoticethatStarbucks’supplyscheduleobeysthe

LawofSupply.Price

oflattesQuantity

oflattessupplied$0.0001.0032.0063.0094.00125.00156.0018019THEMARKETFORCESOFSUPPLYANDDEMANDTheSupplyScheduleSupplyscheStarbucks’SupplySchedule&CurvePrice

oflattesQuantity

oflattessupplied$0.0001.0032.0063.0094.00125.00156.0018PQ020THEMARKETFORCESOFSUPPLYANDDEMANDStarbucks’SupplySchedule&CMarketSupplyversusIndividualSupplyThequantitysuppliedinthemarketisthesumof

thequantitiessuppliedbyallsellersateachprice.SupposeStarbucksandJittersaretheonlytwosellersinthismarket.(Qs=quantitysupplied)1815129630Starbucks121086420Jitters++++====30252015+=10+=5+=0MarketQs

$0.006.005.004.003.002.001.00Price021MarketSupplyversusIndividua21PQTheMarketSupplyCurvePQS(Market)$0.0001.0052.00103.00154.00205.00256.0030022THEMARKETFORCESOFSUPPLYANDDEMANDPQTheMarketSupplyCurvePQS(SupplyCurveShiftersThesupplycurveshowshowpriceaffectsquantitysupplied,otherthingsbeingequal.These“otherthings”arenon-pricedeterminantsofsupply.ChangesinthemshifttheScurve…023THEMARKETFORCESOFSUPPLYANDDEMANDSupplyCurveShiftersThesupplSupplyCurveShifters:InputPricesExamplesofinputprices:

wages,pricesofrawmaterials.Afallininputpricesmakesproduction

moreprofitableateachoutputprice,

sofirmssupplyalargerquantityateachprice,

andtheScurveshiftstotheright.024THEMARKETFORCESOFSUPPLYANDDEMANDSupplyCurveShifters:InputPQSupposethepriceofmilkfalls.Ateachprice,thequantityof

Lattessupplied

willincrease

(by5inthisexample).SupplyCurveShifters:InputPrices025THEMARKETFORCESOFSUPPLYANDDEMANDPQSupposethepriceofmilkfaSupplyCurveShifters:TechnologyTechnologydetermineshowmuchinputsarerequiredtoproduceaunitofoutput.Acost-savingtechnologicalimprovementhas

thesameeffectasafallininputprices,

shiftsScurvetotheright.026THEMARKETFORCESOFSUPPLYANDDEMANDSupplyCurveShifters:TechnoSupplyCurveShifters:#ofSellers

Anincreaseinthenumberofsellersincreasesthequantitysuppliedateachprice, shiftsScurvetotheright.027THEMARKETFORCESOFSUPPLYANDDEMANDSupplyCurveShifters:#ofSSupplyCurveShifters:Expectations

Example:EventsintheMiddleEastleadtoexpectationsofhigheroilprices.Inresponse,ownersofTexasoilfieldsreducesupplynow,savesomeinventorytoselllateratthehigherprice.Scurveshiftsleft.Ingeneral,sellersmayadjustsupply*whentheirexpectationsoffuturepriceschange.

(*Ifgoodnotperishable)028THEMARKETFORCESOFSUPPLYANDDEMANDSupplyCurveShifters:ExpectSummary:VariablesthatInfluenceSellersVariable Achangeinthisvariable…Price …causesamovement

alongtheScurveInputPrices …shiftstheScurveTechnology …shiftstheScurve#ofSellers …shiftstheScurveExpectations …shiftstheScurve029THEMARKETFORCESOFSUPPLYANDDEMANDSummary:VariablesthatInfluACTIVELEARNING2

SupplyCurve30Drawasupplycurvefortax

returnpreparationsoftware.

Whathappenstoitineach

ofthefollowingscenarios?A.

Retailerscutthepriceof

thesoftware.B.

Atechnologicaladvance

allowsthesoftwaretobe

producedatlowercost.C.

Professionaltaxreturnpreparersraisethepriceoftheservicestheyprovide.ACTIVELEARNING30PQSupplyandDemandTogetherDSEquilibrium:

Phasreached

thelevelwhere

quantitysuppliedequals

quantitydemanded031THEMARKETFORCESOFSUPPLYANDDEMANDPQSupplyandDemandTogetherDSDSPQEquilibriumprice:PQDQS$0240121521810315154122059256630thepricethatequatesquantitysuppliedwithquantitydemanded032THEMARKETFORCESOFSUPPLYANDDEMANDDSPQEquilibriumprice:PQDQS$02DSPQEquilibriumquantity:PQDQS$0240121521810315154122059256630thequantitysuppliedandquantitydemandedattheequilibriumprice033THEMARKETFORCESOFSUPPLYANDDEMANDDSPQEquilibriumquantity:PQDQSPQDSSurplus(a.k.a.excesssupply):whenquantitysuppliedisgreaterthanquantitydemandedSurplusExample:

IfP=$5,then

QD=9lattesand

QS=25lattesresultingina

surplusof16lattes034THEMARKETFORCESOFSUPPLYANDDEMANDPQDSSurplus(a.k.a.excesssupPQDSSurplus(a.k.a.excesssupply):whenquantitysuppliedisgreaterthanquantitydemandedFacingasurplus,

sellerstrytoincreasesalesbycuttingprice.Thiscauses

QDtoriseSurplus…whichreducesthesurplus.andQStofall…035THEMARKETFORCESOFSUPPLYANDDEMANDPQDSSurplus(a.k.a.excesssupPQDSSurplus(a.k.a.excesssupply):whenquantitysuppliedisgreaterthanquantitydemandedFacingasurplus,

sellerstrytoincreasesalesbycuttingprice.Thiscauses

QDtoriseandQStofall.SurplusPricescontinuetofalluntilmarketreachesequilibrium.036THEMARKETFORCESOFSUPPLYANDDEMANDPQDSSurplus(a.k.a.excesssupPQDSShortage(a.k.a.excessdemand):whenquantitydemandedisgreaterthanquantitysuppliedExample:

IfP=$1,then

QD=21lattesand

QS=5lattesresultingina

shortageof16lattesShortage037THEMARKETFORCESOFSUPPLYANDDEMANDPQDSShortage(a.k.a.excessdePQDSShortage(a.k.a.excessdemand):whenquantitydemandedisgreaterthanquantitysuppliedFacingashortage,

sellersraisetheprice,causingQDtofall…whichreducestheshortage.andQStorise,Shortage038THEMARKETFORCESOFSUPPLYANDDEMANDPQDSShortage(a.k.a.excessdePQDSShortage(a.k.a.excessdemand):whenquantitydemandedisgreaterthanquantitysuppliedFacingashortage,

sellersraisetheprice,causingQDtofallandQStorise.ShortagePricescontinuetoriseuntilmarketreachesequilibrium.039THEMARKETFORCESOFSUPPLYANDDEMANDPQDSShortage(a.k.a.excessdeThreeStepstoAnalyzingChangesinEq’mTodeterminetheeffectsofanyevent,1.

DecidewhethereventshiftsScurve,

Dcurve,orboth.2.

Decideinwhichdirectioncurveshifts.3.

Usesupply-demanddiagramtosee

howtheshiftchangeseq’mPandQ.40THEMARKETFORCESOFSUPPLYANDDEMANDThreeStepstoAnalyzingChangEXAMPLE:

TheMarketforHybridCars

PQD1S1P1Q1priceofhybridcarsquantityof

hybridcars41THEMARKETFORCESOFSUPPLYANDDEMANDEXAMPLE: TheMarketforHybrSTEP1:Dcurveshifts

becausepriceofgasaffectsdemandforhybrids.Scurvedoesnotshift,becausepriceofgasdoesnotaffectcostofproducinghybrids.STEP2:Dshiftsright

becausehighgaspricemakeshybridsmoreattractiverelativetoothercars.EXAMPLE1:

AShiftinDemand

EVENTTOBE

ANALYZED:

Increaseinpriceofgas.PQD1S1P1Q1D2P2Q2STEP3:Theshiftcausesanincreaseinprice

andquantityofhybridcars.42THEMARKETFORCESOFSUPPLYANDDEMANDSTEP1:STEP2:EXAMPLE1:EXAMPLE1:

AShiftinDemand

PQD1S1P1Q1D2P2Q2Notice:

WhenPrises,producerssupply

alargerquantity

ofhybrids,eventhoughtheScurvehasnotshifted.Alwaysbecarefultodistinguishb/washiftinacurveandamovementalongthecurve.43THEMARKETFORCESOFSUPPLYANDDEMANDEXAMPLE1: AShiftinDemandTermsforShiftvs.MovementAlongCurveChangeinsupply:ashiftintheScurve occurswhenanon-pricedeterminantofsupplychanges(liketechnologyorcosts)Changeinthequantitysupplied:

amovementalongafixedScurve occurswhenPchangesChangeindemand:ashiftintheDcurve occurswhenanon-pricedeterminantofdemandchanges(likeincomeor#ofbuyers)Changeinthequantitydemanded:

amovementalongafixedDcurve occurswhenPchanges44TermsforShiftvs.MovementA44STEP1:Scurveshifts

becauseeventaffectscostofproduction.Dcurvedoesnotshift,becauseproductiontechnologyisnotoneofthefactorsthataffectdemand.STEP2:Sshiftsright

becauseeventreducescost,

makesproductionmoreprofitableatanygivenprice.EXAMPLE2:

AShiftinSupply

PQD1S1P1Q1S2P2Q2EVENT:Newtechnologyreducescostofproducinghybridcars.STEP3:Theshiftcausespricetofall

andquantitytorise.45THEMARKETFORCESOFSUPPLYANDDEMANDSTEP1:STEP2:EXAMPLE2:EXAMPLE3:

AShiftinBothSupply

andDemandPQD1S1P1Q1S2D2P2Q2EVENTS:

priceofgasrisesAND

newtechnologyreducesproductioncostsSTEP1:Bothcurvesshift.STEP2:Bothshifttotheright.STEP3:Qrises,buteffect

onPisambiguous:Ifdemandincreasesmorethansupply,Prises.46THEMARKETFORCESOFSUPPLYANDDEMANDEXAMPLE3: AShiftinBothSEXAMPLE3:

AShiftinBothSupply

andDemandSTEP3,cont.PQD1S1P1Q1S2D2P2Q2EVENTS:

priceofgasrisesAND

newtechnologyreducesproductioncostsButifsupplyincreasesmorethandemand,

Pfalls.47THEMARKETFORCESOFSUPPLYANDDEMANDEXAMPLE3: AShiftinBothSACTIVELEARNING3

Shiftsinsupplyanddemand48Usethethree-stepmethodtoanalyzetheeffectsofeacheventontheequilibriumpriceandquantityofmusicdownloads.EventA: AfallinthepriceofCDsEventB: Sellersofmusicdownloadsnegotiateareductionintheroyaltiestheymustpayforeachsongtheysell.EventC: EventsAandBbothoccur.ACTIVELEARNING48CONCLUSION:

HowPricesAllocateResourcesOneoftheTenPrinciplesfromChapter1:

Marketsareusuallyagoodway

toorganizeeconomicactivity.

Inmarketeconomies,pricesadjusttobalancesupplyanddemand.Theseequilibriumpricesarethesignalsthatguideeconomicdecisionsandtherebyallocatescarceresources.49THEMARKETFORCESOFSUPPLYANDDEMANDCONCLUSION:

HowPricesAllocCHAPTERSUMMARYAcompetitivemarkethasmanybuyersandsellers,eachofwhomhaslittleornoinfluence

onthemarketprice.Economistsusethesupplyanddemandmodeltoanalyzecompetitivemarkets.Thedownward-slopingdemandcurvereflectstheLawofDemand,whichstatesthatthequantitybuyersdemandofagooddependsnegativelyonthegood’sprice.50CHAPTERSUMMARYAcompetitivem50CHAPTERSUMMARYBesidesprice,demanddependsonbuyers’incomes,tastes,expectations,thepricesofsubstitutesandcomplements,andnumberofbuyers.

Ifoneofthesefactorschanges,theDcurveshifts.Theupward-slopingsupplycurvereflectstheLawofSupply,whichstatesthatthequantitysellerssupplydependspositivelyonthegood’sprice.Otherdeterminantsofsupplyincludeinputprices,technology,expectations,andthe#ofsellers.ChangesinthesefactorsshifttheScurve.51CHAPTERSUMMARYBesidesprice,51CHAPTERSUMMARYTheintersectionofSandDcurvesdeterminesthemarketequilibrium.Attheequilibriumprice,quantitysuppliedequalsquantitydemanded.Ifthemarketpriceisaboveequilibrium,

asurplusresults,whichcausesthepricetofall.

Ifthemarketpriceisbelowequilibrium,

ashortageresults,causingthepricetorise.52CHAPTERSUMMARYTheintersectio52TheMarketForcesof

SupplyandDemandEconomicsPRINCIPLESOFN.GregoryMankiw4TheMarketForcesof

SupplyaInthischapter,

lookfortheanswerstothesequestions:Whatfactorsaffectbuyers’demandforgoods?Whatfactorsaffectsellers’supplyofgoods?Howdosupplyanddemanddeterminethepriceofagoodandthequantitysold?Howdochangesinthefactorsthataffectdemandorsupplyaffectthemarketpriceandquantityofagood?Howdomarketsallocateresources?54Inthischapter,

lookforthe54MarketsandCompetitionAmarketisagroupofbuyersandsellersofaparticularproduct.Acompetitivemarketisonewithmanybuyersandsellers,eachhasanegligibleeffectonprice.Inaperfectlycompetitivemarket:AllgoodsexactlythesameBuyers&sellerssonumerousthatnoonecanaffectmarketprice–eachisa“pricetaker”Inthischapter,weassumemarketsareperfectlycompetitive.055THEMARKETFORCESOFSUPPLYANDDEMANDMarketsandCompetitionAmarkeDemandThequantitydemandedofanygoodistheamountofthegoodthatbuyersarewillingandabletopurchase.Lawofdemand:theclaimthatthequantitydemandedofagoodfallswhenthepriceofthegoodrises,otherthingsequal056THEMARKETFORCESOFSUPPLYANDDEMANDDemandThequantitydemandedofTheDemandScheduleDemandschedule:

atablethatshowstherelationshipbetweenthepriceofagoodandthequantitydemandedExample:

Helen’sdemandforlattes.Price

oflattesQuantity

oflattesdemanded$0.00161.00142.00123.00104.0085.0066.004NoticethatHelen’spreferencesobeythe

LawofDemand.057THEMARKETFORCESOFSUPPLYANDDEMANDTheDemandScheduleDemandschePriceofLattesQuantityofLattesHelen’sDemandSchedule&CurvePrice

oflattesQuantity

oflattesdemanded$0.00161.00142.00123.00104.0085.0066.004058THEMARKETFORCESOFSUPPLYANDDEMANDPriceofLattesQuantityofLatMarketDemandversusIndividualDemandThequantitydemandedinthemarketisthesumofthequantitiesdemandedbyallbuyersateachprice.SupposeHelenandKenaretheonlytwobuyersintheLattemarket.(Qd=quantitydemanded)46810121416Helen’sQd

2345678Ken’sQd

++++====691215+=18+=21+=24MarketQd

$0.006.005.004.003.002.001.00Price059MarketDemandversusIndividua59PQTheMarketDemandCurveforLattesPQd(Market)$0.00241.00212.00183.00154.00125.0096.006060THEMARKETFORCESOFSUPPLYANDDEMANDPQTheMarketDemandCurveforDemandCurveShiftersThedemandcurveshowshowpriceaffectsquantitydemanded,otherthingsbeingequal.These“otherthings”arenon-pricedeterminantsofdemand(i.e.,thingsthatdeterminebuyers’demandforagood,otherthanthegood’sprice).ChangesinthemshifttheDcurve…061THEMARKETFORCESOFSUPPLYANDDEMANDDemandCurveShiftersThedemanDemandCurveShifters:#ofBuyersIncreasein#ofbuyers

increasesquantitydemandedateachprice,shiftsDcurvetotheright.062THEMARKETFORCESOFSUPPLYANDDEMANDDemandCurveShifters:#ofBPQSupposethenumberofbuyersincreases.Then,ateachP,

Qdwillincrease

(by5inthisexample).0DemandCurveShifters:#ofBuyers63THEMARKETFORCESOFSUPPLYANDDEMANDPQSupposethenumberofbuyersDemandforanormalgoodispositivelyrelatedtoincome.Increaseinincomecauses

increaseinquantitydemandedateachprice,shiftsDcurvetotheright. (Demandforaninferiorgoodisnegativelyrelatedtoincome.AnincreaseinincomeshiftsDcurvesforinferiorgoodstotheleft.)DemandCurveShifters:Income064THEMARKETFORCESOFSUPPLYANDDEMANDDemandforanormalgoodispoTwogoodsaresubstitutesif

anincreaseinthepriceofone

causesanincreaseindemandfortheother.Example:pizzaandhamburgers.

Anincreaseinthepriceofpizza

increasesdemandforhamburgers,

shiftinghamburgerdemandcurvetotheright.Otherexamples:CokeandPepsi,

laptopsanddesktopcomputers,

CDsandmusicdownloadsDemandCurveShifters: Pricesof RelatedGoods065THEMARKETFORCESOFSUPPLYANDDEMANDTwogoodsaresubstitutesif

Twogoodsarecomplementsif

anincreaseinthepriceofone

causesafallindemandfortheother.Example:computersandsoftware.

Ifpriceofcomputersrises,peoplebuyfewercomputers,andthereforelesssoftware.

Softwaredemandcurveshiftsleft.Otherexamples:collegetuitionandtextbooks,

bagelsandcreamcheese,eggsandbaconDemandCurveShifters: Pricesof RelatedGoods066THEMARKETFORCESOFSUPPLYANDDEMANDTwogoodsarecomplementsif

Anythingthatcausesashiftintastestowardagoodwillincreasedemandforthatgood

andshiftitsDcurvetotheright.Example:

TheAtkinsdietbecamepopularinthe’90s,

causedanincreaseindemandforeggs,

shiftedtheeggdemandcurvetotheright.DemandCurveShifters:Tastes067THEMARKETFORCESOFSUPPLYANDDEMANDAnythingthatcausesashiftiExpectationsaffectconsumers’buyingdecisions.Examples:Ifpeopleexpecttheirincomestorise,

theirdemandformealsatexpensiverestaurantsmayincreasenow.Iftheeconomysoursandpeopleworryabouttheirfuturejobsecurity,demandfornewautosmayfallnow.DemandCurveShifters:Expectations068THEMARKETFORCESOFSUPPLYANDDEMANDExpectationsaffectconsumers’Summary:VariablesThatInfluenceBuyersVariable Achangeinthisvariable…Price …causesamovement

alongtheDcurve#ofbuyers …shiftstheDcurveIncome …shiftstheDcurvePriceof

relatedgoods …shiftstheDcurveTastes …shiftstheDcurveExpectations …shiftstheDcurve069THEMARKETFORCESOFSUPPLYANDDEMANDSummary:VariablesThatInfluA. ThepriceofiPodsfallsB. ThepriceofmusicdownloadsfallsC. ThepriceofCDsfallsACTIVELEARNING1

DemandCurve70Drawademandcurveformusicdownloads.Whathappenstoitineachof

thefollowingscenarios?Why?A. ThepriceofiPodsfallsAC70SupplyThequantitysuppliedofanygoodistheamountthatsellersarewillingandabletosell.Lawofsupply:theclaimthatthequantitysuppliedofagoodriseswhenthepriceofthegoodrises,otherthingsequal071THEMARKETFORCESOFSUPPLYANDDEMANDSupplyThequantitysuppliedofTheSupplyScheduleSupplyschedule:

Atablethatshowstherelationshipbetweenthepriceofagoodandthequantitysupplied.Example:

Starbucks’supplyoflattes.NoticethatStarbucks’supplyscheduleobeysthe

LawofSupply.Price

oflattesQuantity

oflattessupplied$0.0001.0032.0063.0094.00125.00156.0018072THEMARKETFORCESOFSUPPLYANDDEMANDTheSupplyScheduleSupplyscheStarbucks’SupplySchedule&CurvePrice

oflattesQuantity

oflattessupplied$0.0001.0032.0063.0094.00125.00156.0018PQ073THEMARKETFORCESOFSUPPLYANDDEMANDStarbucks’SupplySchedule&CMarketSupplyversusIndividualSupplyThequantitysuppliedinthemarketisthesumof

thequantitiessuppliedbyallsellersateachprice.SupposeStarbucksandJittersaretheonlytwosellersinthismarket.(Qs=quantitysupplied)1815129630Starbucks121086420Jitters++++====30252015+=10+=5+=0MarketQs

$0.006.005.004.003.002.001.00Price074MarketSupplyversusIndividua74PQTheMarketSupplyCurvePQS(Market)$0.0001.0052.00103.00154.00205.00256.0030075THEMARKETFORCESOFSUPPLYANDDEMANDPQTheMarketSupplyCurvePQS(SupplyCurveShiftersThesupplycurveshowshowpriceaffectsquantitysupplied,otherthingsbeingequal.These“otherthings”arenon-pricedeterminantsofsupply.ChangesinthemshifttheScurve…076THEMARKETFORCESOFSUPPLYANDDEMANDSupplyCurveShiftersThesupplSupplyCurveShifters:InputPricesExamplesofinputprices:

wages,pricesofrawmaterials.Afallininputpricesmakesproduction

moreprofitableateachoutputprice,

sofirmssupplyalargerquantityateachprice,

andtheScurveshiftstotheright.077THEMARKETFORCESOFSUPPLYANDDEMANDSupplyCurveShifters:InputPQSupposethepriceofmilkfalls.Ateachprice,thequantityof

Lattessupplied

willincrease

(by5inthisexample).SupplyCurveShifters:InputPrices078THEMARKETFORCESOFSUPPLY