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The document discusses the key factors that cause changes in demand and supply. It identifies five factors that can cause a change in demand: taste, income, market size, consumer expectations, and prices of related goods. It also outlines seven factors that can cause a supply curve to shift: resource costs, alternative output prices, technological improvements, number of suppliers, producer expectations about future prices, subsidies, and taxes. The document uses examples like new cars, used cars, and milk to illustrate how these different factors impact demand and supply.

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K.J. Somaiya Comprehensive College Of Education ,Training And Research (B.Ed ) NAME - SONAL KHANNA ROLL NO ¨C 31 ECONOMICS CAUSES FOR CHANGES IN DEMAND AND SUPPLY
Concentration on these slides is guaranteed to improve your economics grade. Warning
Causes of Changes in Demand and Supply
Let's Take A Look At The Five Demand Shifters ["TIMER"]
D 1 D 2 P QD 1 QD 2 1."Change in Taste" [Direct]
D 1 D 2 P QD 1 QD 2 2. Change in Income [Normal-Direct; Inferior-Inverse] More income results in more demand for new cars; less demand for used cars. New Cars Used Cars Less income results in more demand for used cars; less demand for new cars.
D 1 D 2 P QD 1 QD 2 3. Change in Market Size [Direct] [Number of Consumers] More demand for both new and used cars New Cars Used Cars This is what we told 1 billion Chinese , as new potential consumers , when we opened trade relations with them in the 70s.
D 1 D 2 P QD 1 QD 2 4. Expectations [of consumers] [about future price, availibility, & income] I f Mr.Rakesh responds to iRate customers who bought the iPhone at Rs39900 and says, ¡° iSorry , we will raise the price back to Rs39900 in 3 weeks.¡± iPhone Rs39900 Buy it now to save money.
D 1 D 2 P QD 1 QD 2 4. Expectations [of consumers] [about future availability of goods] If there is expected to be a major shortage of toilet tissue , then consumers will stock up now or risk not getting any .
QD 2 4. Expectations [of consumers] [about future income] D 1 D 2 P QD 1 Let¡¯s say that we are coming out of recession & consumers feel secure about their jobs. [ Positive future income ]
D 1 D 2 P QD 1 QD 2 4. Expectations [of consumers] [about future income] Let¡¯s say that we are going into a recession and consumers don¡¯t feel secure about their jobs. [ Negative future income ]
Complement [ Inverse ] Substitute [ Direct ] Milk Cereal Pop Tarts D 1 D 2 P P 1 QD 1 P 2 D 1 D 2 D P 5. Prices of Related Goods [Substitutes-Direct; Complements-Inverse] QD 2
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1. Resource Cost [wages & raw materials ] [Inverse] Wages Raw Materials S If resource cost decreases supply Increases [making more $] If resource cost increases supply Decreases [making less $] S S P
P1 P1 QS1 Broccoli ¡° Substitutes in production¡± I only have 200 acres S Corn S 1 P S 2 QS1 S 1 P S 2 S Corn Producers want to produce more of the good where price is increasing, or at least, where the price is not going down. Broccoli 2. Alternative Output Price Change [Inverse] P2 QS2 P2 QS2
S Because cows produce more milk, farmers don¡¯t have to have as many cows. [ saves $ ] S P 3. Technological Improvement [Cow Waterbeds] We love these cow waterbeds because we get better blood flow and can produce 30% more milk . Supply curve moves ¡°udderly¡± to the right. Less skin abrasions so happier cows produce more milk. Mooooove over and give me that waterbed. Waterbedsforcows.com
NFL Supply of FB games increased when the XFL was formed. S 3 QS QS XFL in 2001 4. Number of Suppliers [Direct] Because of the XFL¡¯s cheerleaders many called this league, not the XFL, but the Supply of FB games each week XXXFL XFL [Extreme Football League] 8 new teams S 1 P Q $50
If oil p roducers expect future oil prices to decline , they will (increase/decrease) current production. S 1 Oil Prices expected to decrease 5. Producer Expectations about Future Price [¡°INVERSE¡±] P S 2 If oil p roducers expect future oil prices to increase , they will (increase/decrease) current production. S 2 Oil Prices expected to increase
S 3 [Direct] P 6. Subsidies - free money from government Free money from the government ( subsidies ) induces suppliers to supply more. S 1 S 2 If subsidies are taken away, then suppliers are losing money and will decrease supply.
S 3 [Inverse] P 7. Taxes Take Away Business Profits & Decrease Supply. If business have their taxes decreased , it moves the supply curve to the right. S 1 S 2 If business have their taxes increased , it moves the supply curve to the left. I¡¯m losing profits.¡±
Let¡¯s check your memory What are the market determents ? DEMAND AND SUPPLY Which are the reasons for CHANGE in demand? TIMER T aste I ncome M arket size E xpectation of consumers R elated goods (prices) How does INCOME affect demand? Inc income more purchases of new goods
Let¡¯s check your memory What are the determinants of supply? RATNEST R esource cost, A lternative price change , T echnological improvements, N o:of suppliers, P roducer expectation of prices, S ubsidires, T axes How do producers react to future supply changes? With respect to changes in demand the producer will increase or decrease production
Thank- You The End

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Sonal khanna eco.

  • 1. K.J. Somaiya Comprehensive College Of Education ,Training And Research (B.Ed ) NAME - SONAL KHANNA ROLL NO ¨C 31 ECONOMICS CAUSES FOR CHANGES IN DEMAND AND SUPPLY
  • 2. Concentration on these slides is guaranteed to improve your economics grade. Warning
  • 3. Causes of Changes in Demand and Supply
  • 4. Let's Take A Look At The Five Demand Shifters ["TIMER"]
  • 5. D 1 D 2 P QD 1 QD 2 1."Change in Taste" [Direct]
  • 6. D 1 D 2 P QD 1 QD 2 2. Change in Income [Normal-Direct; Inferior-Inverse] More income results in more demand for new cars; less demand for used cars. New Cars Used Cars Less income results in more demand for used cars; less demand for new cars.
  • 7. D 1 D 2 P QD 1 QD 2 3. Change in Market Size [Direct] [Number of Consumers] More demand for both new and used cars New Cars Used Cars This is what we told 1 billion Chinese , as new potential consumers , when we opened trade relations with them in the 70s.
  • 8. D 1 D 2 P QD 1 QD 2 4. Expectations [of consumers] [about future price, availibility, & income] I f Mr.Rakesh responds to iRate customers who bought the iPhone at Rs39900 and says, ¡° iSorry , we will raise the price back to Rs39900 in 3 weeks.¡± iPhone Rs39900 Buy it now to save money.
  • 9. D 1 D 2 P QD 1 QD 2 4. Expectations [of consumers] [about future availability of goods] If there is expected to be a major shortage of toilet tissue , then consumers will stock up now or risk not getting any .
  • 10. QD 2 4. Expectations [of consumers] [about future income] D 1 D 2 P QD 1 Let¡¯s say that we are coming out of recession & consumers feel secure about their jobs. [ Positive future income ]
  • 11. D 1 D 2 P QD 1 QD 2 4. Expectations [of consumers] [about future income] Let¡¯s say that we are going into a recession and consumers don¡¯t feel secure about their jobs. [ Negative future income ]
  • 12. Complement [ Inverse ] Substitute [ Direct ] Milk Cereal Pop Tarts D 1 D 2 P P 1 QD 1 P 2 D 1 D 2 D P 5. Prices of Related Goods [Substitutes-Direct; Complements-Inverse] QD 2
  • 13. ?
  • 14. 1. Resource Cost [wages & raw materials ] [Inverse] Wages Raw Materials S If resource cost decreases supply Increases [making more $] If resource cost increases supply Decreases [making less $] S S P
  • 15. P1 P1 QS1 Broccoli ¡° Substitutes in production¡± I only have 200 acres S Corn S 1 P S 2 QS1 S 1 P S 2 S Corn Producers want to produce more of the good where price is increasing, or at least, where the price is not going down. Broccoli 2. Alternative Output Price Change [Inverse] P2 QS2 P2 QS2
  • 16. S Because cows produce more milk, farmers don¡¯t have to have as many cows. [ saves $ ] S P 3. Technological Improvement [Cow Waterbeds] We love these cow waterbeds because we get better blood flow and can produce 30% more milk . Supply curve moves ¡°udderly¡± to the right. Less skin abrasions so happier cows produce more milk. Mooooove over and give me that waterbed. Waterbedsforcows.com
  • 17. NFL Supply of FB games increased when the XFL was formed. S 3 QS QS XFL in 2001 4. Number of Suppliers [Direct] Because of the XFL¡¯s cheerleaders many called this league, not the XFL, but the Supply of FB games each week XXXFL XFL [Extreme Football League] 8 new teams S 1 P Q $50
  • 18. If oil p roducers expect future oil prices to decline , they will (increase/decrease) current production. S 1 Oil Prices expected to decrease 5. Producer Expectations about Future Price [¡°INVERSE¡±] P S 2 If oil p roducers expect future oil prices to increase , they will (increase/decrease) current production. S 2 Oil Prices expected to increase
  • 19. S 3 [Direct] P 6. Subsidies - free money from government Free money from the government ( subsidies ) induces suppliers to supply more. S 1 S 2 If subsidies are taken away, then suppliers are losing money and will decrease supply.
  • 20. S 3 [Inverse] P 7. Taxes Take Away Business Profits & Decrease Supply. If business have their taxes decreased , it moves the supply curve to the right. S 1 S 2 If business have their taxes increased , it moves the supply curve to the left. I¡¯m losing profits.¡±
  • 21. Let¡¯s check your memory What are the market determents ? DEMAND AND SUPPLY Which are the reasons for CHANGE in demand? TIMER T aste I ncome M arket size E xpectation of consumers R elated goods (prices) How does INCOME affect demand? Inc income more purchases of new goods
  • 22. Let¡¯s check your memory What are the determinants of supply? RATNEST R esource cost, A lternative price change , T echnological improvements, N o:of suppliers, P roducer expectation of prices, S ubsidires, T axes How do producers react to future supply changes? With respect to changes in demand the producer will increase or decrease production