D1 D2
P
QD1 QD2
New Cars
D1 D2
More income
results in
more demand
for new cars;
less demand
for used cars.
Used Cars
P
QD1 QD2
Less income
results in
more demand
for used cars;
less demand
for new cars.
D1 D2
This is what we told 1 billion
Chinese, as new potential
consumers, when we opened
trade relations with them in
the 70s.
New Cars
P
More demand
for both new
and used cars
QD1 QD2
Used Cars
$399
If Steve Jobs responds to iRate customers who
bought the iPhone at $599 and says, “iSorry,
we will raise the price back to $599 in 3 weeks.”
D1 D2
Buy it now to save money.
iPhone
P
QD1 QD2
If there is expected to be a major shortage of toilet tissue,
then consumers will stock up now or risk not getting any.
D1 D2
P
QD1 QD2
Let’s say that we are coming out of recession & consumers
feel secure about their jobs. [Positive future income]
D1 D2
P
QD1 QD2
Let’s say that we are going into a recession and consumers
don’t feel secure about their jobs. [Negative future income]
D1
D2
P
QD2QD1
D1 D 2
D
D1
P1
P
D2
P
P2
Complement
[Inverse]
Milk
QD1 QD2
Cereal
Substitute
[Direct]
Pop Tarts
1.Resource Cost [wages & raw materials] [Inverse]
Raw Materials
Wages
If resource cost
decreases
supply
Increases
[making more $]
S
P
If resource cost
S
S
increases
supply
Decreases
[making less $]
I only have
200 acres
“Substitutes in production”
Broccoli
P2
Corn
S
S2
S1
P
P1
QS1 QS2
Producers want to produce more of the good where price is increasing,
Broccoli
P1
Corn
S
S1
S2
P
P2
QS2 QS1
or at least, where the price is not going down.
Waterbedsforcows.com
We love these cow waterbeds because we get better
blood flow and can produce 30% more milk.
Because cows
produce more
milk, farmers
don’t have to
have as many P
cows.[saves $]
Less skin abrasions
so happier cows
produce more milk.
S
Supply curve
S moves “udderly”
to the right.
Mooooove over and give me that waterbed.
NFL
P
S1
S3
XFL
in 2001
$50
8 new teams
Because of the
XFL’s cheerleaders
many called this
league, not the
XFL, but the
XXXFL
QS
QS
Q
Supply of FB games each week
XFL [Extreme Football League]
Supply of FB games increased when the XFL was formed.
[“INVERSE”]
S2
Oil Prices
expected P
to decrease
S1
S2
Oil Prices
expected
to increase
If oil producers expect future oil prices to
decline, they will (increase/decrease)
current production.
If oil producers expect future oil prices to
increase, they will (increase/decrease)
current production.
S3
[Direct]
S1
S2
P
Free money from the government (subsidies)
induces suppliers to supply more.
If subsidies are taken away, then suppliers are losing
money and will decrease supply.
S3
I’m losing
profits.”
[Inverse]
S1
S2
P
If business have their taxes decreased,
it moves the supply curve to the right.
If business have their taxes increased,
it moves the supply curve to the left.