Econ 4

The price of hamburgers The demand curve for hamburgers shows the relationship between the price of hamburgers and the quantity of hamburgers demanded by consumers, assuming that all the determinants of demand are held constant. The following list displays determinants of demand, which are the factors that affect the quantity of hamburgers consumers want to buy at a given price: FACTORS THAT DETERMINE DEMAND -Price of a related good (complement or substitute) -Income of consumers -Tastes of consumers -Number of consumers -Expectations of consumers Therefore, if the price of hamburgers changes, the result is a MOVEMENT along the demand curve from the old price to the new one. However, if a change occurs in any of the factors that determine demand - such as the price of hot dogs ( a substitute), the price of hamburger buns (a complement), or the income of hamburger consumers - the result is a shift of the demand curve

Supply, quantity demanded Demand refers to the position of the demand curve Quantity demanded refers to the amount consumers wish to buy Supply refers to the position of the supply curve Quantity supply refers to the amount of supplies you wish to sell In this case, an increase in supply will cause the equilibrium price to decrease, resulting in a movement along the demand curve. The demand curve itself remains unchanged, but the quantity demanded is affected. (Question 2 to see graph)

The demand curve shifts to the right When a fall in the price of one good reduces the demand for another good, the two goods are called substitutes. If movie tickets and DVDs are substitutes and the price of DVDs increases, this means he demand for movie tickets will also increase. This results in the demand curve shifting to the right.

Supply, lower The supply curve for gasoline shows the relationship between the price of gasoline and the quantity of gasoline supplied by production, assuming that all the determinants of supply are held constant. The following list displays determinants of supply, which are the factors that affect the quantity of gasoline producers want to sell at a given price: FACTORS THAT DETERMINE SUPPLY -Price of inputs -Production technology -Number of producers -Expectations of producers Therefore, if the price of gasoline changes, the result is a movement along the supply curve from the old place to the new one. However, if a change occurs in any of the factors that determine supply, such as the discovery of a large new reserve of crude oil, the result is shift of the supply curve. In this case, the supply of gasoline increases because of the new oil reserve causing the equilibrium price to decline. (Question #4 for graph)

Prices and quantities both rise If the demand for a good rises when income falls, the good is called an inferior good. An increase in demand results in a rise in both the equilibrium price and quantity of a good (question #5 graph)

An increase in the price of grapes,, an input to jelly If a change occurs in any of the factors that determine supply - such as an increase in the price of grapes, an input to jelly-the result is a shift of the supply curve. In this case, the change in he price of jelly causes the supply curve of jelly to fall. This leads to an increase in the equilibrium price of jelly, and a decrease in the equilibrium quantity of jelly sold (Question #6 graph)