Chap003.11 - to the good or service 2 An increase in the...

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11 Chapter 3 - Supply and Demand: An Introduction Slide 61 Price Quantity P’ P Q’ Q S D D’ A decrease in demand will lead to a decrease in both the equilibrium price and quantity Four Rules Governing the Effects of Supply and Demand Shifts: II Chapter 3 - Supply and Demand: An Introduction Slide 62 P’ P Q Q’ S’ D S Price Quantity An increase in supply will lead to a decrease in the equilibrium price and an increase in the equilibrium quantity Four Rules Governing the Effects of Supply and Demand Shifts: III Chapter 3 - Supply and Demand: An Introduction Slide 63 P P’ Q’ Q S D S’ Price Quantity An decrease in supply will lead to an increase in the equilibrium price and a decrease in the equilibrium quantity Four Rules Governing the Effects of Supply and Demand Shifts: IV Chapter 3 - Supply and Demand: An Introduction Slide 64 Predicting and Explaining Changes in Prices and Demand Factors That Cause an Increase (rightward or upward shift) in Demand 1. A decrease in the price of complements
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Unformatted text preview: to the good or service 2. An increase in the price of substitutes for the good or service 3. An increase in income (for a normal good) Chapter 3 - Supply and Demand: An Introduction Slide 65 Predicting and Explaining Changes in Prices and Demand ± Factors That Cause an Increase (rightward or upward shift) in Demand 4. An increased preference by demanders for the good or service 5. An increase in the population of potential buyers 6. An expectation of higher prices in the future Chapter 3 - Supply and Demand: An Introduction Slide 66 Predicting and Explaining Changes in Prices and Demand ± Factors That Cause an Increase (rightward or upward shift) in Supply 1. A decrease in the cost of materials, labor, or other inputs used in the production of the good or service 2. An improvement in technology that reduces the cost of producing the good or service...
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