Shifting of Demand and Supply Curves (Part I)

Описание: Transcript:

1 The market equilibrium changes all the time
2 as demand and
3 supply conditions change.
How do the curves shift?
4 First, we gotta know who cares?
5 Buyers or sellers?
6 Which direction does the curve shift?
7 How does price and quantity change?

8 Let’s recap.
Here’s the factors affecting supply and demand.
9 Suppose income increases.
People have more money, they buy more stuff.

11 Ah…it increases demand.
13 Demand curve shifts right.
14 Demand curve shifts right.
15 Price increases.
16 Quantity increases.


19 When income drops,
21 Demand decreases.
23 Demand curve shifts left.
24 Demand curve shifts left.
25 Price decreases.
26 Quantity decreases.


29 When wages decrease,
Remember, labor is a type of input.
30 Input prices decrease,
Producers can produce more with the same budget now.
31 So supply increases.

33 Supply shifts right.
34 Supply shifts right.
35 Price decreases.
36 Quantity increases.

37 When wages increase,
38 Input prices increase.
39 Supply decreases.
41 Supply shifts left.
42 Supply shifts left.
43 Price increases.
44 Quantity decreases.

49 Seems simple.
Cool, what happens if both supply and demand curves shift?
Check out the next video to find out.
50 If you like this video,
remember to like and subscribe.

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Why does market equilibrium change all the time? Why do prices and quantities change all the time?

Well, market conditions change and those cause demand and supply curves to shift, affecting price and quantity. To determine which curve shifts, we need to understand who is the party here concerned? Sellers or buyers? Which direction does the curve shift? How do price and quantity change?

For instance, when more people prefer healthy good, demand for healthy food such as sushi and sandwiches increase, increasing price and quantity. There are other factors affecting demand too. For instance, price of substitutes and complements; future expectation of prices and population.

The supply curve shifts too. When natural disaster hits, factors of production get destroyed. It gets more expensive to produce car, for example. Hence, supply of cars decrease, the supply curve shifts left, causing price to increase and quantity to decrease.

In general, when demand increases, the demand curve shifts right. Price and quantity increase.
When demand decreases, the demand curve shifts left. Price and quantity decrease.
When supply increases, the supply curve shifts right. Price decreases and quantity increases.
When supply decreases, the supply curve shifts left. Price increases and quantity decreases.