Eco 561

Topics: Supply and demand, Consumer theory, Demand curve Pages: 2 (599 words) Published: April 26, 2013
What kinds of changes in underlying conditions can cause the supply and demand curves to shift? Give examples and explain the direction in which the curves shift. There are some detailed determinants that are actually associated with the supply or “shifts in supply” can be recognized to the following alterations as well as modifications: 1.Resource prices. If the cost prices of the reserve of iron ore and coke are higher than it enhance the rate of producing steel, grasp earnings as well as shrink supply. Then the supply curve will move to the left. Inferior reserve prices of sand, gravel and limestone condense the cost of assembly of concrete, increase the profits in addition to enlarge concrete supply. As a result of which the supply curve will move to the right side. 2.Technology. For instance, the technology plays a very effective role and helps to increase the work efficiency. So added valuable GPS equipment boost the contribution of GPS devices. As a result of which the supply curve will swing to the right side. 3.Taxes and subsidies. For illustration, the ever-increasing taxes on cars lead to the cut down of bring in of cars. Therefore the supply curve will move to the left. 4.Prices of other goods. For pattern, if we enhance the cost of carrots it definitely diminishes the supply of potatoes. The supply curve will reallocate to the left. 5.Expectations. Expectations are actually a belief that may increase or decrease the price. The expectation that the cost of paper will do up in the future may reduces the supply of paper these days. The supply curve then swing to the left. 6.Number of suppliers. Enlargement in the amount of surfboard shops may amplify the supply of surfboards. The supply curve will reallocate to the right. As the determinants related to the supply are already being discussed, so lets have a look on the precise determinants that are really associated with that of the demand. So some of the exact determinants of demand or a...
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