Supply and Demand Worksheet

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Increase/Decrease in Quantity Demand

Increase in Demand

Decrease in Demand

P

P

P A P1

B

D2

P2

Demand Q

Q1 Q2 Movement Up/Down the Demand Curve Change in Price 1. Increase in Price causes a decrease in quantity demand. 2. Decrease in Price causes an increase in quantity demand.

D1

D1 D2

Q Shift to the right of the Demand Curve Change in Factors Other Than Price 1. Increase in Taste increases the demand curve. 2. Increase in population increases the demand curve. 3. Increase in income in income increases demand if a normal good. 4. Decrease in income increases demand if an inferior good. 5. Increase in price of substitute (pepsi) increases demand for good (coke). 6. Decrease in price of complement (beer) increases demand for good (pizza). 7. If I expect the price of the product to increase in the future, my demand today will increase.

Q Shift to the left of the Demand Curve Change in Factors Other Than Price 1. Decrease in Taste decreases the demand curve. 2. Decrease in population decreases the demand curve. 3. Increase in income decreases demand if an inferior good. 4. Decrease in income decreases income if a normal good. 5. Decrease in price of substitute (pepsi) decreases demand for good (coke). 6. Increase in price of complement (beer) decreases demand for good (pizza). 7. If I expect the price of the product to decrease in the future, my demand today will decrease.

Follow up questions: What happens to the demand for coffee if? 1. 2. 3. 4. 5. 6.

People start to going to Starbucks in droves. The price of coffee mugs increases. Would this event affect other markets related to coffee? The price of tea decreases. Your income increases. Assume that people will drink coffee no matter what their income, but the type of coffee might change. The price of coffee increases. A civil war is expected to break out next week in Brazil, which will lead to increased coffee prices.

Increase/Decrease in Quantity Supply

Increase in Supply

Decrease in Supply

P

P

P

Supply

P2

B

P1

S1

S2

S2

S1

Q

Q

A

Q1

Q2

Q

Movement Up/Down the Supply Curve Change in Price 1. Increase in Price causes a increase in quantity supply. 3. Decrease in Price causes an decrease in quantity supply.

Shift to the right of the supply curve

Shift to the left of the supply curve

Change in Other Factors than Price 1. Increase in technology causes an increase in supply. 2. Decrease in resource prices causes an increase in supply. 3. Increase in number of firms selling the product causes an increase in supply.

Change in Other Factors than Price 1. Decrease in technology causes a decrease in supply. 2. Increase in resource prices causes a decrease in supply. 3. Decrease in number of firms selling the product causes a decrease in supply.

Follow up questions: What happens to the supply of coffee if? 1. 2. 3. 4.

The price of coffee increases. A new machine is found that speeds up the production process from coffee bean to coffee. Workers in Colombia, Brazil and Kona unionize and demand higher wages. The five (my assumption!) existing coffee firms in the world merge into one company.

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Supply and Demand Worksheet

Increase/Decrease in Quantity Demand Increase in Demand Decrease in Demand P P P A P1 B D2 P2 Demand Q Q1 Q2 Movement Up/Down the Demand Cur...

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