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Lecture 7

ECON 101 Lecture 7: Demand and Supply
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3 Pages
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Winter 2015
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Department
Economics
Course Code
ECON 101
Professor
Marina Adshade
Lecture
7

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ECON 101 - Lecture #7 - Demand and Supply
How do Different Factors Change Demand?
What happens when:
1) Price of complement rises - demand decreases
2) Income falls, and the good is inferior - demand increases
3) Population grow - demand increases
4) Price of good increases - movement up the curve (decrease in quantity demanded)
5) Future income expected to decrease, the good is normal - demand decreases
6) Price of good expected to increase in the future - demand increases
Supply Schedule and Supply Curves
Quantity supplied is the amount producers are willing to offer for sale during a specific
period of time
Factors that influence quantity supplied are:
The good’s price
The price of inputs
○ Technology
Expectations about the future
The number of firms in the industry
The weather
Distinguish supply schedule from supply curve
Supply schedule, like demand schedule, is a table presenting amount of supplies
offered at different prices
Supply curve is the graphical representation of supply schedule
Figure 1. Supply schedule and curve.
Change in quantity supplied refers to movement along the curve
Change in supply refers to shift in the entire supply function
How do the Changes in Different Factors Affect Supply?

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Description
ECON 101 - Lecture #7 - Demand and Supply How do Different Factors Change Demand? ● What happens when: 1) Price of complement rises - demand decreases 2) Income falls, and the good is inferior - demand increases 3) Population grow - demand increases 4) Price of good increases - movement up the curve (decrease in quantity demanded) 5) Future income expected to decrease, the good is normal - demand decreases 6) Price of good expected to increase in the future - demand increases Supply Schedule and Supply Curves ● Quantity supplied is the amount producers are willing to offer for sale during a specific period of time ● Factors that influence quantity supplied are: ○ The good’s price ○ The price of inputs ○ Technology ○ Expectations about the future ○ The number of firms in the industry ○ The weather ● Distinguish supply schedule from supply curve ○ Supply schedule, like demand schedule, is a table presenting amount of supplies offered at different prices ○ Supply curve is the graphical representation of supply schedule Figure 1. Supply schedule and curve. ● Change in quantity supplied refers to movement along the curve ● Change in supply refers to shift in the entire supply function How do the Changes in Different Factors Affect Supply? ● What happens to supply if there are: 1) Lower interest rates - supply increases (business owners can borrow more money to produce) 2) Higher wages for workers producing good - supply decreases (input price is higher) a) But one could also argue that higher income leads to more productive workers and supply will increase 3) Price of the good increases - no shift in supply, but the quantity supplied will decrease 4) Sunny weather - supply may shift left or right depending on the good 5) Increase in number of firms producing the good - supply will increase 6) Price of
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