Demand and Supply - notes from class

Factors that cause a change in Demand	Shift the D curve
•The prices of related goods	áp substitute (e.g. Pepsi and coke) then áDemand for our product.  If áp of a complement (e.g. hamburger and chips; petrol and cars) then âDemand for our product.
• Expected future prices	If you expect price á then buy more now and D increases (shifts)
• Income of consumers	Normal and inferior goods.  –         As your income á you demand ánormal good e.g. fast food.–         As your income á you demand âinferior good e.g. instant noodles
• Expected future income of consumers	If you expect your income toá  you might start buying now
• Population	á people arriving in Singapore increase the demand in Singapore.
• Preferences (Tastes)	People like what is trendy áDemand

Factors cause a change in Supply
• The prices of productive resources	áp of FOP cause a â supply of our good and shifts the supply curve leftward.
• Expected future prices	If suppliers expect á prices in future they will â production now in anticipation for the future supply at higher prices
• The number of suppliers	An increase in the number of suppliers shifts the supply curve rightward.
• Technology	átechnology lowers the cost of producing existing products á shift supply curve rightward.  A natural disaster is a negative technology change, which â supply and shifts the supply curve leftward
• The prices of related goods produced (substitutes and complements)	a.     A substitute in production for a good is another good that can be produced using the same resources. (e.g. ATM machine vs. human bank teller).  If âP of substitute (Human bank tellers), then the supply of our good á (ATM) b.     Goods are complements in production if they must be produced together. (e.g. Supply of beef and leather are compliments in production since they are produced together). âP of the compliment, the supply of our good â.  E.g. if the price of leather falls, the supply of beef will drop too.