The factors that causes shift in demand and supply curves

The factors that causes shift in demand and supply curves

  • Demand curves shift.Changes in factors like average income and preferences can cause an entire demand curve to shift right or left. This causes a higher or lower quantity to be demanded at a given price.

Factors that causes shift in demand curves

  • Normal and inferior goods

ü  Income

ü  Changing tastes or preferences

ü  Changes in the composition of the population

ü  Related goods

ü  Changes in expectations about future prices or other factors that affect demand

Factors that Cause a Shift in the Supply Curve

The supply curve shows how much of a good or service sellers are willing to sell at any given price. However, it is not constant over time. Whenever a change in supply occurs, the supply curve shifts left or right (similar to shifts in the demand curve). An increase in supply results in an outward shift of the supply curve (i.e. to the right), whereas a decrease in supply results in an inward shift (i.e. to the left).

There are a number of factors that cause a shift in the supply curve: input prices, number of sellers, technology, natural and social factors, as well as expectations.  Input prices

ü  Number of Sellers

ü  Technology

ü  Natural and Social Factors

ü  Expectations

 

 

  1. Q= a-bp

Find the slope of an assumed linear demand curve for garri, when Mr. Anthony purchase 1000 quantities at N200 per plastic and 500 quantities at N350 per plastic?

Q = 1000

P= N200

1000 = 4-200b

1004-200b= 5.02

 

Q=500

P=350

500=4-350b

350b=504

=1.44

1.44 x5.02 = 7.22

 

  1. Equilibrium: Qs = Qd

Qd= 160-Q

Qs = 120-16Q

P= 120 + 16Q =  160-Q

16Q+Q = 160 – 120

17Q = 40

Divide both side by 17

= 2.35

 

3b.  Qs = 120 – 16Q

Qs= 120 -16(50)

120-800

=640

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