Econ Lecture: Shifting Demand and Supply

Introduction

• Presented by Mr. Clifford from ACDC Econ.
• Topic: Shifting Demand and Supply.
• Previous lessons covered:
  • Downward sloping demand.
  • Upward sloping supply.
  • Equilibrium - point where quantity demanded equals quantity supplied.
  • Changes in price affect movement along curves, causing surpluses and shortages.

Shifters of Demand and Supply

• Changes in price lead to movements along the curve, not shifts.
• Shifts indicate a change in the entire demand or supply curve.
• There are 5 shifters for demand and 5 for supply.

Example from "Frozen"

• Scene: Princess Anna at Wandering Oaken's Trading Post.
• Scenario: Summer becomes winter affecting the market for sun balm.
  • This is a demand issue (consumers affected).
  • Demand decreases as sun balm is less needed in winter.
  • Result: Demand curve shifts left. New equilibrium shows lower price and quantity.

Practice Scenarios

• Task: Analyze scenarios for hamburgers.
  • Draw supply and demand graphs for each scenario.

Scenario Analysis

1. New Grilling Technology

• Effect: Supply shifts right (increase).
• Shifter: Technology.
• Result: Price decreases, quantity increases.

2. Increase in Price of Chicken Sandwiches (Substitute)

• Effect: Demand shifts right (increase).
• Shifter: Price of related goods (substitutes).
• Result: Price and quantity both increase.

3. Decrease in Price of Hamburgers

• Effect: No shift, movement along curves.
• Result: Demand increases, supply decreases, leading to a shortage.

4. Increase in Price of Ground Beef (Resource)

• Effect: Supply shifts left (decrease).
• Shifter: Cost of resources.
• Result: Price increases, quantity decreases.

5. Human Fingers Found in Restaurants

• Effect: Demand shifts left (decrease).
• Result: Price and quantity both decrease.
• Note: Anecdote about a student mistaking supply as affected due to worker capabilities.

Importance of Understanding Supply and Demand

• Essential for microeconomics and macroeconomics students.
• Practical application in predicting market changes.
• Beneficial for business and consumer decision-making.

Conclusion

• Next topic: Price control, including price ceilings and floors.
• Recommendation to use a review app for studying.

Additional Anecdote

• Ice selling as a tough business, illustrating supply and demand challenges.