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    Black arab Galadima
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    This document discusses how changes in market conditions cause price changes through changes in demand and supply. It uses examples of shawarmas and Land Cruisers to illustrate how: 1) An increase in demand for shawarmas due to new health information will cause the demand curve to shift right, leading the price to rise until a new higher equilibrium is reached. 2) A reduction in the costs of producing Land Cruisers will cause the supply curve to shift right, creating excess supply at the original price. This will lead the price to fall until it reaches a new lower equilibrium. 3) In both cases, the price changes to clear the market and balance demand and supply at the new equilibrium point

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    This document discusses how changes in market conditions cause price changes through changes in demand and supply. It uses examples of shawarmas and Land Cruisers to illustrate how: 1) An increase in demand for shawarmas due to new health information will cause the demand curve to shift right, leading the price to rise until a new higher equilibrium is reached. 2) A reduction in the costs of producing Land Cruisers will cause the supply curve to shift right, creating excess supply at the original price. This will lead the price to fall until it reaches a new lower equilibrium. 3) In both cases, the price changes to clear the market and balance demand and supply at the new equilibrium point

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    5 views17 pages

    Chapter 10 - Economics 9BR

    Uploaded by

    Black arab Galadima
    This document discusses how changes in market conditions cause price changes through changes in demand and supply. It uses examples of shawarmas and Land Cruisers to illustrate how: 1) An increase in demand for shawarmas due to new health information will cause the demand curve to shift right, leading the price to rise until a new higher equilibrium is reached. 2) A reduction in the costs of producing Land Cruisers will cause the supply curve to shift right, creating excess supply at the original price. This will lead the price to fall until it reaches a new lower equilibrium. 3) In both cases, the price changes to clear the market and balance demand and supply at the new equilibrium point

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    of 17

    Chapter 10

    Price changes
    Economics IGCSE
    Learning objectives
    By the end of this chapter you will be able to:

    • explain how changes in market conditions cause price changes

    • use demand and supply diagrams to illustrate changes in market


    conditions and the consequences for equilibrium price and sales
    Can you name a few items that have been increasing in price in recent
    years?

    Can you name a few items that have been decreasing in price in recent
    years?

    What causes prices to change?


    The effect of changes in demand
    • Price changes when the market conditions of demand and supply
    change.

    • What are some of the conditions of demand?

    • And supply?
    Test your knowledge: Describe P1? Describe P2?

    Market forces:
    ?
    Price

    P1

    P ?

    P2

    Q1 Q Q2
    Quantity
    The effect of changes in demand
    Shawarmas:
    Step 1. _____ currently equals _______. There are no s______ or s______ in the market.
    S
    Price

    P1

    P Market equilibrium

    P2

    Q1 Q Q2
    Quantity
    The effect of changes in demand
    Shawarmas:
    Step 2. research shows that eating 2 shawarmas a day is good for your health. What will
    happen now?
    S
    Price

    P1

    P Market equilibrium

    P2

    Q1 Q Q2
    Quantity
    The effect of changes in demand
    Shawarmas:
    Step 2. Demand will increase. The demand curve will shift to the right
    S
    Price

    P1

    P2

    D1
    D

    Q1 Q Q2
    Quantity
    The effect of changes in demand
    Shawarmas:
    Step 2. What do you notice now? Is the market in a state of equilibrium?
    S
    Price

    P1

    P2

    D1

    Q1 Q Q2
    Quantity
    The effect of changes in demand
    Shawarmas:
    Step 3. What will happen next?
    S
    Price

    P1

    P2

    D1

    Q1 Q Q2
    Quantity
    The effect of changes in demand
    Shawarmas:
    Step 3. The price will rise to clear the market. ________ will contract and ______ will
    extend until they reach the new _____ ______.
    S
    Price

    P1

    D1

    Q Q1 Quantity
    The effect of changes in supply
    Land Cruisers:
    Step 1. _____ currently equals _______. There are no s______ or s______ in the market.
    S
    Price

    P1

    P Market equilibrium

    P2

    Q1 Q Q2
    Quantity
    The effect of changes in supply
    Land Cruisers:
    Step 2. The cost of manufacturing Land Cruisers significantly reduces due to the
    introduction of new robotics and AI. What will happen now?
    S
    Price

    P1

    P2

    Q1 Q Q2
    Quantity
    The effect of changes in supply
    Land Cruisers:
    Step 2. At the original equilibrium price, where is demand and supply now? Describe the
    market.
    Price S

    S1
    P1

    P2

    Quantity
    The effect of changes in supply
    Land Cruisers:
    Step 2. At the original equilibrium price P, there is excess supply, or a ________.
    Therefore, prices will _______to ________ the _________.
    Price

    S1

    Quantity
    The effect of changes in supply
    Land Cruisers:
    Step 3. A fall in price will cause ________ to ________ and _______ to _______ until we
    reach a new ________ ________ at X.
    Price

    S1

    Quantity
    The effect of changes in supply
    Land Cruisers:
    Step 3. the market will reach a new equilibrium point at X.
    Price

    S1

    P1
    X

    Q Q1 Quantity

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