c



 ² factors that will shift the supply curve leftward

(decrease) or rightward (increase)

1. resource prices

V as resource prices rise, supply decreases

V as resource prices fall, supply increases

2. Technology

V s technology improves, supply increases

3. Taxes and Subsidies

V s taxes increase, supply decreases

V s taxes decrease, supply increases

4. Prices of Other Goods

V  decline in price of  causes the supply of B to increase

V n increase in the price of  causes the supply of B to decrease

5. Price Expectations

V This may go either way, depending on the situation

V The price of corn rises, and as a result, farmers withhold some
of their corn harvest from the market, anticipating a higher
price in the future
V n manufacturing, expected price increases may induce firms to
add another shift of workers to expand production facilities,
causing supply to increase

6. Number of sellers in the market

V s the number of suppliers increases, supply increases

V s the number of suppliers decreases, supply decreases

c


c 

The determinants of demand are also known as demand shifters. They result in
the leftward (decrease) or rightward (increase) shifts in the demand curve.

1.) tastes or preferences of consumers

V an increased taste in a product increases its demand

V a decreased taste in a product decreases its demand

2.) number of consumers in the market

V more consumers increases a products demand

 V fewer consumers decreases a products demand

3.) the money incomes of consumers

    or   

V s income increases, a superior good's demand increases

V s income decreases, a superior good's demand decreases
V Superior goods are most common goods


  

V s income increases, an inferior good's demand decreases

V s income decreases, an inferior good's demand increases

4.) prices of related goods




 

V s price of  increases, demand for B increases

V s price of  decreases, demand for B decreases
V Example: Nike's and Reeboks

£    
 

V s price of  increases, demand for B decreases

V s price of B decreases, demand for  increases
V Example: computers and computer games; gasoline and motor oil

  
 

V s price of good  changes, demand for good B does not change

5.) consumer expectations about the future prices and incomes

V if consumers expect a price increase in near future, demand increases

V if consumers expect a price decrease in the near future, demand
decreases