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The Dynamics of Market Shifting: Economics Lesson

Learn how changes in demand and supply impact equilibrium prices in markets using the toothpaste industry as an example. Understand the determinants affecting equilibrium price and quantity.

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The Dynamics of Market Shifting: Economics Lesson

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  1. Economics Unit 4, Lesson 1 MARKETS TO SHIFT OR NOT TO SHIFT

  2. Objectives • Identify the determinant that causes a change in equilibrium price. • Construct a market, and graph a change in supply and demand with new equilibrium.

  3. What does it take to make a market? • Buyer = demand • Seller= Supply Draw a market and label • P • Q • S & D • EP & EQ

  4. Product: Toothpaste $ S E EP D Q EQ

  5. Show what would happen if Crest has a very successful ad campaign. Change in D? or Change in S?

  6. Product: Toothpaste $ S E1 EP1 D1 Q EQ1

  7. Product: Toothpaste $ S E2 EP2 E1 EP1 D2 D1 Q EQ1 EQ2

  8. What happened to EP? Increased To EQ? Increased So we can generalize and say if… D  EP  EQ 

  9. Show what would happen if the price of seaweed goes up. Change in D? or Change in S?

  10. Product: Toothpaste $ S E1 EP1 D1 Q EQ1

  11. Product: Toothpaste S2 $ S1 E2 EP2 E1 EP1 D1 Q EQ2 EQ1

  12. This was caused by a change in the cost of inputs. Seaweed is a major ingredient of toothpaste.

  13. What happened to EP? Increased To EQ? Decreased So we can generalize and say if… S  EP  EQ 

  14. Show what would happen if a new machine can harvest seaweed faster and cheaper. Change in D? or Change in S?

  15. Product: Toothpaste $ S E1 EP1 D1 Q EQ1

  16. Product: Toothpaste $ S1 S2 E1 EP1 EP2 D1 EQ1 EQ2 Q

  17. What happened to EP?DecreasedWhat happened to EQ?IncreasedSo we can generalize and say if… S EP EQ 

  18. Show what would happen if the Surgeon General announced that toothpaste was harmful to your heart. Change in Demand or Change in Supply?

  19. Product: Toothpaste $ S1 E1 D1 Q

  20. Product: Toothpaste $ S E1 EP1 EP2 D1 D2 EQ2 Q EQ1

  21. What happened to EP?What happened to EQ?

  22. Both decreased.We can generalize and say if… D  EP  EQ 

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