ECON 2100 Lecture Notes - Lecture 4: Latte, Starbucks, Economic Equilibrium

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Published on 9 Sep 2016
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Chapter 4- The Market Forces of Supply and Demand Continued
-Demand Curve Shifters: Expectations
Expectations affect consumers’ buying decisions.
Example: If a family’s increase in income occurs, then there desire for expensive outings of
shopping and restaurants will increase.
- Demand Curve Shifters: Tastes
Anything that causes a shift in tastes toward a good will increase demand for that good
and shift its D curve to the right.
- Supply
The quantity supplied of any good is the amount that sellers are willing and able to sell.
Law of Supply: the claim that the quantity supplied of a good rises when the price of the good
rises, other things equal.
- The Supply Schedule
Supply Schedule: A table that shows the relationship between the price of a good and the
quantity supplied.
Example: # of Starbucks lattes. As the quantity of lattes supplied increases, the price of the
lattes does as well.
- Market supply vs. Individual Supply
The quantity supplied in the market is the sum of the quantities supplied by all sellers at each
price.
Individual Suppliers do not produce as many as Market Suppliers.
- Supply Curve Shifters
The supply curve shows how price affects quantity supplied, other things being equal.
“Other things”- other than the price of a good that determines the seller’s supply of the good.
- Supply Curve Shifters: Input Prices
Wages, price of materials
A decrease in input prices makes it more profitable for each output price, therefore increasing
the production number.
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