Ch 04 - Shifting Demand and Supply Curves.pptx

Ch 04 - Shifting Demand and Supply Curves.pptx - Why does...

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Why does gasoline price rise? Many people blame the greed of oil companies. Suppose their greed raises the price of gasoline. Have you ever seen gasoline prices fall? The logical explanation would be: If greed raises gas prices, less greed must be the reason why gas prices fall.
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Does greed explain anything? Many people blame “greedy” Wall Street for the financial meltdown. Many people blame “greedy” insurance companies for many problems in the healthcare market. They ignore the “greed” of the buyers. More importantly, if their greed was the root cause, Why wouldn’t other markets, such as computers, have similar problems? Are they more generous producers who care about consumers?
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Practice Problems Using Demand-Supply Diagrams
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Steps to Solve Demand-Supply Questions 1. Draw a demand-supply diagram and identify what market is being studied (write the name of the good or service next to (under) “Q” in the diagram). 2. Determine whether the supply or demand will be affected 3. Determine which way to shift the curve. Right (increase), Left (decrease) Make sure to label both axes and curves. Use arrows to show the directions of the changes.
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1. Draw a diagram and identify the market. P Q D 1 S 1 P 1 Q 1 Corn Write capital L. Write capital X.
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