Vocabulary Determinant- factor which shifts demand or supply curve.

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Presentation transcript:

Vocabulary Determinant- factor which shifts demand or supply curve

SSEMI3 The student will explain how markets, prices, and competition influence economic behavior. a. Identify and illustrate on a graph factors that cause changes in market supply and demand.

What did this cause (economically)? Those same folks apparently rushed to iTunes to download Elliott's music. Eight of her songs cracked the iTunes top 200 chart, including 2002's "Work It," 2001's "Get Ur Freak On" and 2005's "Lose Control." Those songs also electrified Spotify. Streams of Elliott's music increased a whopping 676%, the music service reported.

What does this movie have to do with t-shirts?

How did a late night TV show save Twister?

How did a late night TV show save Twister?

How do these relate?

Shifts in Demand Shifts in the demand curve are dictated by the determinants of demand. Note-Movement along the curve is due to a price change, not a shift.

Difference between change in demand and quantity demanded Change in demand is shift of entire curve Change in quantity demanded is simple change in # on same curve

Important An increase in demand is a shift to the right (not up) A decrease in demand is a shift to the left (not down).

Determinants of Demand The determinants are- TIRES Tastes- Consumer Preferences(Commercials/Ads) Income- Amount of money consumers have Related Goods- Substitute(Replaces) Coke=Pepsi Complimentary(Associated with) Peanut Butter & Jelly Expectations- Consumer view of future of market/price Size- Market(# of potential consumers) area by either 1)Business Decision 2)Government Decision 3)Technology

Effects of Determinants Change Effect on Demand Taste Decline Decrease, shift to left Income Related Goods Substitute Goods Sub. $ decrease Complimentary Goods Rel. $ decrease Increase, shift to right Expectations Future $ increase Increase now, shift right Size of Market Shrinks Examples

The Opposite is True

Write the # correct line 1)An increase in demand 2)A decrease in demand 3)The item becomes more popular 4)The price of substitute falls 5)The price of complement falls 6)The item is available to more people

Effect on Price

Impact of Shifts in Demand Curve Direction of Shift Effect on Price Effect on Quantity Demand Left(Decrease) Decrease Right(Increase) Increase

Steps in Supply/Demand Shifts 1)Determine if situation involves supply(making/producing) or demand(buying) 2)Determine if there will be an increase or decrease 3)Determine how this will affect price and quantity