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Php 25 2 10
Php 20 4 9
Php 15 7 7
Php 10 9 4
Php 5 10 2
The Equilibrium of Supply and Demand
Price of Ice-
Cream Cone
Supply
Demand
Equilibrium quantity
0 1 2 3 4 5 6 7 8 9 10 11
Quantity of Ice-
Cream Cones
SHORTAGE AND SURPLUS
Shortage. The quantity demanded is greater than
quantity supplied. Prices tend to rise.
Php 20.00
Php 15.00
Demand
0 1 2 3 4 5 6 7 8 9 10 11 Quantity of Ice-
Quantity Quantity
Demanded Supplied Cream Cones
Shortage / Excess Demand
Price of Ice-
Cream Cone
Supply
Php 15.00
Php 10.00
Shortage
• Shift
-A change in different factors affecting demand
and supply causes a shift in the demand and supply
curve itself.
Shift and Movements in the
Demand Curve
A Shifts in the Demand Curve
Price of Banana Cue
B A
Php 10.00
D1
D2
0 10 20
Number of Banana Cue
A Movement Along the Demand Curve
C
Php 20.00
A
Php 10.00
D1
0 12 20
Number of Banana Cue
Shift and Movements in the
Supply Curve
A Shift of The Supply Curve
S1 S2
Php 15.00 J
G
Price of Supply
banana cue
Php 15.00 G
Php 10.00 F
Supply
Php 20.00 New equilibrium
Php 10.00
Initial D2
equilibrium
D1
0 1 2 3 4 5 6 7 10 11 Quantity of Ice-
Cream Cone
Supply
Price of Ice- S2
Cream Cone
S1
Php 20.00 New equilibrium
Demand
0 1 2 3 4 7 10 11 Quantity of Ice-Cream
Cones
Both Demand and Supply
Price of
Large increase
Ice-Cream in demand
Cone
New
S2
equilibrium S1
P2
Small
decrease in
supply
P1 Initial equilibrium D2
D1
0 Q1 Q2 Quantity of Ice-
Cream Cone
Remember:
Shifts in either supply or demand change equilibrium price
and quantity.
Summary of the Effects of Supply and
Demand Shifts
Effect on Effect on
Shift and Equilibrium
How We Say It Equilibrium
Direction
Price Quantity
Demand curve shifts
“Demand decreases.” _ _
left.
3
3
Price Ceiling
2
2
3
3
Price Ceiling
2
2
Shortage
100 Quantity of
200
icecreams 800 Quantity of
100 200
icecreams
The shortage can be eliminated by importing , rationing
and injecting buffer stocks to the market
Why would they do it?