Non-Price 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 _____________.