factors that effect d and s

demand: change in income

1. income

   1. normal goods

      1. income increases, demand increases, and shifts the demand curve right

      2. Income falls, demand falls, and the demand curve shifts left

   2. inferior

      1. income decrease, demand rise and shifts the demand curve left

      2. income rises, demand decrese, and demand curve shifts right

2. price of a related good

   1. substitute “or” (coke vs Pepsi)

      1. a rise in the price of a substitute increases the demand (shifts the demand curve rightward)

      2. a fall in the price of the substitute decreases the demand (shifts the demand curve leftward)

   2. compliments “and” ( hot dog and hot dog bun)

      1. a rise in the price of a complement decreases the demand (shifts the demand curve leftwards)

      2. a fall in the price of a complement increases the demand (shifts the demand curve rightward)

      3. sometimes just the presence of additional complements increases the products for a product ( phone and apps)

3. preferences

   1. an increase in the preferences for a good increases the demand (shifts the demand curve rightward)

   2. a decrease in the preference for a good decreases the demand (shifts the demand curve leftward)

4. number of demanders

   1. an increase in the number of demanders increases the demand (shifts the demand curve rightward)

   2. a decrease in the number of demanders decreases the demand ) and shifts the demand curve leftward)

5. credit market conditions

   1. “good”

      1. credit market conditions increase the demand (shifts the demand curve rightwards)

   2. “bad”

      1. credit market conditions decrease the demand ( shifts the demand curve leftward)

6. expected future price

   1. when the expected future prices rise, the current demand increases (shifts the demand curve rightward)

   2. when the expected future price falls, the current demand decreases (shifts the demand curve leftward)

shift of the supply curve

1. cost

   1. a fall in cost increases the supply (shifts the supply curve rightward)

   2. a rise in costs decreases the supply ( shifts the supply curve leftward)

2. price of related goods

   1. substitutes in production “ or” (Toyota SUV or hybrid)

      1. a fall in the price of a substitute in production increases the supply( shifts the supply curve rightward)

      2. a rise in the price of a substitute in production decreases supply

   2. complements in production “and”

      1. a rise in the price of a compliment ina product increases the supply (shifts the supply curve rightward)

      2. a fall in the price of a complement in production decreases the supply (shifts the supply curve leftwards)

3. Technology

   1. technological advancements increase supply (shift to the right)

4. Number of suppliers

   1. increase in the number of suppliers increases the supply

   2. decrease in the number of suppliers decreases the supply

5. State of nature (things created on the land)

   1. good state of nature (ex: FL having fewer weaker hurricanes) supply will increase

   2. bad state of nature will decrease the supply

6. expected future price

   1. future price falls, the current supply increases

   2. future price rises, the current supply decreases