Supply+and+Demand
Page 1: SUPPLY, DEMAND, AND WELFARE
Overview
Review of economic fundamentals focusing on the interaction of supply and demand.
Introduction to government interventions in microeconomics context.
Course identification: Econ 313: Lavender.
Page 2: OVERVIEW QUESTIONS
Key Inquiry Areas
What determines demand?
What determines supply?
How do supply and demand interact to create equilibrium?
Page 3: WHAT FACTORS AFFECT THE PRICE OF GASOLINE?
Influential Elements
Explore various factors influencing gasoline prices which can include: crude oil prices, production costs, government regulations, and market competition.
Page 4: FUNDAMENTALS OF MARKET
Market Dynamics
Market: where buyers and sellers interact.
Suppliers: providers of goods and services.
Transactions: exchange of goods for price.
Quantity: number of goods sold in the market.
Page 5: OREO ACTIVITY
Student Engagement
Activity designed to demonstrate supply and demand principles using Oreos as a case study.
Page 6: THE DEMAND CURVE
Insights into Demand
Quantity demanded: The amount of a good buyers are willing to consume at the current price.
Law of Demand: Inverse relationship between price and quantity demanded.
If price increases, quantity demanded decreases.
If price decreases, quantity demanded increases.
Example: Price of Oreos falls, leading to increased demand.
Page 7: THE DEMAND CURVE
Market Demand Dynamics
Market demand: the horizontal sum of all individual quantities demanded at each price.
Example combined consumption of Oreos by individuals Ned and Emma at different price points.
Page 8: THE DEMAND CURVE (Continued)
Price Points and Market Demand
Chart reflecting how individual demand translates to market demand at given prices for Oreos.
Page 9: SHIFTS IN THE DEMAND CURVE
Understanding Demand Changes
Quantity Demanded vs. Demand Changes:
Movement along the curve due to price changes.
Shift of the curve due to non-price factors.
Page 10: SHIFTS IN THE DEMAND CURVE
Understanding Shifts
Two perspectives on shifts:
Same price leading to different quantity demanded (left/right shift).
Same quantity demanded resulting in different willingness to pay (up/down shift).
Page 11: SHIFTS IN THE DEMAND CURVE
Shifting Factors
Reasons demand curve may shift:
Changes in preferences, consumer numbers, substitute/complement prices.
Changes in income, expectations, taxes, or subsidies.
Page 12: PRACTICE SHIFTS IN DEMAND
Application Scenarios
Analyze how various situations would affect the demand curve:
Price drop of peanut butter (a complement).
Seasonal health trends impacting cookie consumption.
Increasing gluten intolerance.
Rising prices of Oreos.
Economic recession effects.
Anticipated Oreos shortage.
Page 13: SUPPLY
Core Concepts of Supply
Quantity supplied: The amount producers are willing to sell at current prices.
Law of Supply: Direct relationship between price and quantity supplied.
If price decreases, quantity supplied decreases.
If price increases, quantity supplied increases.
Page 14: SHIFTS IN THE SUPPLY CURVE
Factors Influencing Supply Shifts
Factors that may cause shifts in the supply curve include:
Changes in production input prices, technology, number of sellers, and producer expectations.
Page 15: WHAT IS THE MARKET?
Understanding Market Scope
Concept of product differentiation and market scope.
Discussion on the realism of demand curve modeling.
Page 16: SUPPLY PRACTICE
Supply Scenarios
Analyze potential outcomes in pizza supply as influenced by cheese prices.
Evaluation of various scenarios affecting the orange supply curve.
Page 17: BRINGING SUPPLY AND DEMAND TOGETHER
Equilibrium Pricing
Equilibrium price: Occurs when quantity supplied equals quantity demanded.
Concept of market clearing price and its significance.
Page 18: BRINGING SUPPLY AND DEMAND TOGETHER
Price Dynamics in Market
Law of Supply and Demand: Market price adjusts to balance supply and demand.
Shortage: Demand exceeds supply, leading to price increases.
Surplus: Supply exceeds demand, resulting in price decreases.
Page 19: RIGHTWARD SHIFTS & EQUILIBRIUM
Effects of Demand Increases
Impact of demand increase leading to higher equilibrium price and quantity.
Effects of supply increases reducing equilibrium price while increasing quantity.
Page 20: LEFTWARD SHIFTS & EQUILIBRIUM
Effects of Demand and Supply Decrease
Demand decrease leads to lower equilibrium price and quantity.
Supply decrease results in higher price and lower quantity.
Page 21: GRAPHING EQUILIBRIUM IMPACTS
Graphical Analysis Tasks
Situational analysis for graphing impacts on the Oreo market; determine price and quantity responses based on various economic factors.