ROTTEN & TRIBE — Supply/Demand Mnemonic

Quick notes: ROTTEN is used for supply shift, TRIBE is used for demand shift. Producers/suppliers are used interchangeably

Supply: R

resources/inputs (production/labor)

• ex. Change to the price of apples (an ingredient) affects the quantity supplied of apple pie

Supply: O

other goods (hardly used)

Supply: T(echnology)

Ex. New inventions/methods of productions

• better manufacturing technique = better production = more supply

Supply: T(axes)

• ex. Government action:

  • excise tax: tax on the production or sale of a specific good or service

  • Subsidies: government gives money to a group of people (increases supply from that producer)

  • Regulation: the act of controlling business behavior through a set of rules/laws (decreases supply from that producer)

Supply: E

expectations

• what the producer expects of the price (either increase or decrease) and will adjust the amount of product to supply based on that expectation

Supply: N

number of producer/suppliers

• Less suppliers = less supply

Demand: T

tastes and preferences (of the buyer)

• ex. New and effective ad about Nissan rogue increases sales of that car

Demand: R

related goods

• substitutes (ex. Tangerines price increases, demand for oranges increases because they are substitutes, oranges are cheaper)

• complements (ex. Cookies price decreases, milk demand increases)

Demand: I

income

• normal goods

• Inferior goods (no name, cheaper)

  • If income decreases, demand for inferior goods increases because it is cheaper while providing the same function

Demand: B

number of Buyers

Demand: E

expectations (of buyer)

• a planned vacation makes them buy a new car