Markets and shifts of supply

and demand
  Aim of this session is analyze basic concepts about
Perfect Competition Markets, ceteris paribus and shifts
Introduction of supply and demand
  Characteristics:
 There are many buyers

Perfect  There are many sellers

 Firms produce similar products
Competition
 Symmetric information
Markets  There aren’t barriers to entry or exit from the market
 There is not transaction costs.
 Equilibrium
Market and
ceteris paribus
assumption Ceteris Paribus: Other things remaining the same.

Such as: Consumer’s income, Substitute prices,

tastes and preferences.

Then, short term market comprises following

variables prices and quantity supplied and
demanded.
  Shifts of Supply and Demand:
 A) Shifts of Demand:
 A.1) Demand Increase
Without ceteris  A.2) Demand Decrease
Paribus  B) Shifts of Supply
Assumption:  B.1) Supply increase
 B.2) Supply decrease
Shift of demand:
Demand
increases
Causes: Consumers' Income increase, fashion product,
Season product, immigration increases.

Effect: P increases and Qd increases too.

Shift of demand:
Demand
decreases
Causes: Consumer’s income decrease, old
fashion product, out of season product,
emigration increases.

Effect: P decreases, Qd decreases

Shift of supply:
Supply
increases

Causes: Technology improve, inputs costs

decrease, another enterprises entry to the
market.
.
Effect: P decreases and Qs increases.
Shift of supply:
Supply
decreases
Causes: Obsolete machinery, inputs costs
increase, enterprises leave the market.

Effect: P increases, Qs decreases.