1. © SOUTH-WESTERN  12.1 Students understand common terms & concepts and economics reasoning. Standard Address 1 6.2 - Objectives  Explain how a shift of the demand curve affects equilibrium price and quantity.  Explain how a shift of the supply curve affects equilibrium price and quantity.  Explain what happens to equilibrium price and quantity if both curves shift.

2. © SOUTH-WESTERN

3. CONTEMPORARY ECONOMICS: LESSON 6.23 LESSON 6.2 Shifts of Demand and Supply Curves  increase in demand  decrease in demand  increase in supply  decrease in supply Key Terms

4. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.24 Shifts of the Demand Curve  A shift of the demand curve means that quantity demanded changes at each price.

5. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.25 What Could Shift the Demand Curve?  An increase in the money income of consumers  An increase in the price of a substitute  A change in expectations  A growth in the population of consumers  A change in consumer tastes

6. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.26 What Could Shift the Demand Curve?  An increase in the money income of consumers

7. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.27 What Could Shift the Demand Curve?  An increase in the price of a substitute

8. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.28 What Could Shift the Demand Curve?  A change in expectations

9. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.29 What Could Shift the Demand Curve?  A growth in the population of consumers

10. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.210 What Could Shift the Demand Curve?  A change in consumer tastes

11. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.211 An Increase in Demand  An increase in demand means that consumers are now more willing and able to buy the product at every price.

12. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 5.212 An Increase Demand 30

13. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.213 A Decrease in Demand  A decrease in demand means that consumers are less willing and able to buy the product at every price.

14. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 5.214 A Decrease Demand 30

15. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.215 Summary of Demand Shifts  If the demand curve shifts rightward, price and quantity increase.  If the demand curve shifts leftward, price and quantity decrease.

16. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.216 How does a shift of the demand curve affect equilibrium price and quantity?  A rightward shift of the demand curve increases both price and quantity,  A downward shift of the demand curve decreases both price and quantity. Checkpoint: pg. 171

17. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.217 Shifts of the Supply Curve  A shift of the supply curve means that quantity supplied changes at each price.

18. © SOUTH-WESTERN What Could Shift the Supply Curve? 1.A reduction in the price of a resource used to make pizza, such as mozzarella cheese. 2.A decline in the price of another good these resources could make; such as Italian bread. 3.A technological breakthrough in pizza ovens. 4.A change in expectations that encourage pizza makers to expand production 5.An increase in the number of pizzerias. CONTEMPORARY ECONOMICS: LESSON 6.218

19. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.219 An Increase in Supply  An increase in supply means that producers are more willing and able to supply pizza at every price.

20. © SOUTH-WESTERN A Increase in Supply As long as the demand curve slopes downward, a rightward shift of the supply curve reduces the price but increases the quantity CONTEMPORARY ECONOMICS: LESSON 6.220

21. © SOUTH-WESTERN Shift of the Supply Curve CONTEMPORARY ECONOMICS: LESSON 6.221

22. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.222 A Decrease in Supply  A decrease in supply means that producers are less willing and able to supply the product at every price.

23. © SOUTH-WESTERN A Decrease in Supply As long as the demand curve slopes downward, a leftward shift of the supply curve increases the price but reduces the quantity. CONTEMPORARY ECONOMICS: LESSON 6.223

24. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.224

25. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.225 Summary of Supply Shifts  If the supply curve shifts rightward, price decreases but quantity increases.  If supply shifts to the left, price increases but quantity decreases.

26. © SOUTH-WESTERN Summary of Supply Shifts Given a downward –sloping demand curve, a rightward shift of the supply curve decreases price but increases quantity, and a leftward shift of the supply curve increases price but decreases quantity. CONTEMPORARY ECONOMICS: LESSON 6.226

27. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.227 How does a shift of the supply curve affect equilibrium price and quantity?  A rightward shift of the supply curve decreases price but increases quantity, and a leftward shift of the supply curve increases price but decreases quantity. Checkpoint: pg. 173

28. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.228 Both Curves Shift  Curves shift in the same direction  Equilibrium quantity will increase.  What happens to price depends on which curve shifts more.

29. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.229 Both Curves Shift  Curves shift in opposite directions  Equilibrium price will increase if demand increases and supply decreases.  Equilibrium price will decrease if demand decreases and supply increases.

30. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.230

31. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.231 Change in Supply Decrease Increases Decreases Change in Demand Equilibrium price change is indeterminate. Equilibrium quantity increases. Equilibrium price falls. Equilibrium quantity change is indeterminate. Equilibrium price rises. Equilibrium quantity change is indeterminate. Equilibrium price change is indeterminate. Equilibrium quantity decreases.

32. © SOUTH-WESTERNCONTEMPORARY ECONOMICS: LESSON 6.232 What happened to equilibrium price and quantity if both curves shift in the same direction?  If both curves shift, the equilibrium quantity will increase.  Whether the equilibrium price increases or decreases depends on which curve shifts more.  If the demand curves move in opposite directions, you can say what will happen to the price.  Equilibrium price will increase if demand increases and supply increases.  Equilibrium price will decrease if demand decreases and supply increases.  You can’t say for sure what will happen to quantity when the curves move in opposite directions. Checkpoint: pg. 175