Determinants of Supply and Demand

Determinants of
Supply and Demand
SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits work to determine production and distribution in a
market economy.
a. Define the Law of Supply and the Law of Demand.
b. Describe the role of buyers and sellers in determining market clearing price.
c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.
d. Explain how prices serve as incentives in a market economy.
SSEMI3 The student will explain how markets, prices, and competition influence economic behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
Determinants of Demand
1. Consumer tastes and preferences
2. Market Size
3. Income
4. Prices of Related Goods
5. Consumer Expectations
Determinants of Demand
• 1. Shakira puts out a new album, the demand curve will shift
to the ___________
• 2. International trade opens a new market for selling CD’s, the
demand curve will shift to the __________
• 3. You lose your job and your income decreases, this causes
the demand curve to shift to the _________
• 4. Prices of Blue Ray discs increase, this will cause the demand
curve for DVDs to shift to the _______
• 5. You believe that tomorrow the price of gasoline will be
$0.50 a gallon, this will make the demand curve for gasoline
TODAY shift to the __________
Determinants of Supply
1. Input Costs of resources
2. Taxes, Subsidies, and Regulations
3. Competition
4. Producer Expectations
5. Technology
Determinants of Supply
• 1. The cost of cotton declines, the supply of t-shirts will shift
to the ______________
• 2. The government plans to lower taxes on imported steel, the
supply of cars will shift to the ______________.
• 3. After a number of years of successful competition between
4 cell phone companies, 2 of them begin to experience
declining sales and file for bankruptcy. The supply of cell
phones will shift to the ___________.
• 4. Producers of gasoline expect the price to Triple in the next 2
weeks, supply for CURRENT gasoline will shift to the
• 5. A new machine increases productivity of cars, supply will
shift to the _____________.