 influenced by prices, income, and tastes Individual Demand Movies Other Total Concerts $40) $240 $8) 160 1,600 $2,000 A limited income. The mix of food, entertainment, etc. that provides the greatest benefit. 3 Supply and Demand

$20 16 Price Quantity The Demand Curve

Concert Tickets (000s) Price ($) Demand Schedule Demand Curve 1,000 3,000 5,000 7,000 9,000 Qnty $100 $80 $60 $40 $20 Price

Concert tickets (000s) Price ($) Change in:price Movement along the demand curve Change in:income tastes substitutes Shift of the demand curve = Change in “demand” Movement Along vs. Shift

Change in Demand Price of substitute  Income  Demand for a good Price of complement  Population  Expectation that price will  in the future

Effect of an Increase in Demand Bushels of wheat (millions) Price ($) Supply Increase in equilibrium price Increase in equilibrium quantity

The Supply Curve $20 16 Price Quantity

Bushels of wheat (millions) Price ($) Change in:price Movement along the supply curve Change in:input prices technology expectations Shift of the supply curve = Change in “supply” Movement Along vs. Shift

Changes in Supply Technological advance Input costs  Supply of a good Number of suppliers  Expectation that price will  in the future Government subsidies 

Bushels of wheat (millions) Price ($) Supply Demand Supply, Demand, and Equilibrium  when quantity demanded = quantity supplied At $20: excess supply  price will drop At $10: excess demand  price will rise

$20 16 Price Quantity

Effect of an Increase in Supply Bushels of wheat (millions) Price ($) Decrease in equilibrium price Increase in equilibrium quantity

No. of apartments (000s) Monthly Rent ($100) Applications Apartment Rental: Increased enrollment

Pounds of Coffee (M) Price per pound ($) Coffee: Poor weather in Brazil

Pounds of Poultry (M) Price per pound ($) Increasing Poultry Consumption

Units of cocaine (00s) Price per unit ($) Falling Cocaine Prices