Demand and Supply part 2 - Econ 1021 Fall 2009 Part 2 of 2...

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    SUPPLY & DEMAND ANALYSIS OUTLINE:   SHIFTING THE DEMAND CURVE; SUPPLY FIXED  SHIFTING THE SUPPLY CURVE;  DEMAND FIXED  SHIFTING BOTH DEMAND & SUPPLY  MOVING FROM MICRO- TO MACRO- ECONOMICS  Econ 1021 Fall 2009 Part 2 of 2 Reading:   pp. 81-83, 85-88 from Macroeconomics in Context
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    Price of Fish Qty Demanded New Qty Demanded ( $ / lb ) (millions lbs. / month) (millions lbs. / month) $ 2.40 6 12 9 2.20 8 11 11 2.00 10 10 13 1.80 12 9 15 1.60 14 8 17 Shifts in Demand:  Income Suppose that Incomes Rise… Q S
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Shifts in Demand:  Income 1.60 1.80 2.00 2.20 2.40 2 4 6 8 10 11 12 14 Quantity millions lbs/month Price $/lb Supply old equilib. shortage Demand New Demand New equilib.
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    Shifts in Demand Any factor that causes the demand curve to  shift to the right, and does not affect the  supply curve, will raise the equilibrium price  and increase the equilibrium quantity. Any factor that causes the demand curve to  shift to the left, and does not affect the supply  curve, will lower the equilibrium price and  lower the equilibrium quantity.   Everything works in reverse when income falls.    
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    What causes demand curve to... Shift right?             Shift left?      increase # buyers increase income  (“normal” good;  opposite for “inferior”) like product more expectations decrease price of  complement good increase price of  substitute good higher equilib price 
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