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Supply Demand PDF
Supply Demand PDF
Demand
What are the basic laws of supply
and demand?
What causes shifts in the curves
of supply and demand?
What is “supply and demand”?
• Supply and demand is
how economists track
the dividing of
resources & their value
within a society
• Answer:
– If nothing changes, a company will produce a
greater quantity of products when the price for
that good is high. (WHY?)
Supply Curve for Xbox 360
a
$500 S
b
450
c
Price per Xbox
400
e
350
f
300
g
250
h
200
S
0 30 40 50 60 70 80 90
Quantity Supplied
in Billions of Xboxes per Year
• “P.I.G. T.O.E.S”
– P roductivity (workers, machines, and/or assembly)
– I nputs (Change in the price of materials needed to make the
good)
– G overnment Actions (Subsidies, Taxes, and Regulations)
450
Price per Xbox
400
200
S
0 30 40 50 60 70 80 90
Quantity Supplied
in Billions of Xboxes per Year
400
350
300
250
200
S S
0 30 40 50 60 70 80 90
Quantity Supplied
in Billions of Xboxes per Year
450
Price per Xbox
400
200
S
0 30 40 50 60 70 80 90
Quantity Supplied
in Billions of Xboxes per Year
• Answer:
– If nothing else changes, the demand of a good is
greatest for consumers when the price is low.
(WHY?)
Demand Curve for Xbox 360
D
A
$500
Price per XBox
B
$450
C
400
E
350
F
300
G
250
H
200
D
0 45 50 55 60 65 70 75
Quantity Demanded
in Billions of Xboxes per Year
• “P.O.I.N.T.”
D
$500
Price per XBox
$450
400
350
Price for Xbox games
300 drops = increase in
demand for Xbox
250 related products =
increase in Xbox
200 demand
D
0 45 50 55 60 65 70 75
Quantity Demanded
in Billions of Xboxes per Year
decrease in Xbox
$450
demand
400
350
300
250
200 D
0 45 50 55 60 65 70 75
Quantity Demanded
in Billions of Xboxes per Year
D
$500 Decrease in
Price per XBox
consumer income =
$450 less $$$ for luxury
goods = decrease in
400 Xbox demand
350
300
250
200
D
0 45 50 55 60 65 70 75
Quantity Demanded
in Billions of Xboxes per Year
450
400
E
350
300
g
250
D
200
S
0 30 40 50 60 70 80 90
Quantity
in Billions of Xbox 360 per Year