WEBVTT

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Hey how you doing econ students this is Mr.
Clifford welcome to ACDC econ.

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Right now we’re gonna talk about shifting
demand and supply.

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(Music starts).

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In previous videos you learned about demand
and why it’s downwards sloping.

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You also learned about supply and why it’s
upwards sloping.

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And of course you understand the idea of equilibrium.

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That is the only place where the quantity
demand exactly equals a quantity supply.

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You should also understand why when there’s
a change in price that moves along the curve.

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For example, when the price goes up the quantity
supply increases and the quantity demand it

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decreases causing a surplus.

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When the price falls below equilibrium the
quantity demand increases, the quant supply

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decreases and that causes a shortage.

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And that’s what happens when there’s a
change in price it moves along the demand

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and supply curves.

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But what if there’s a shift in the entire
curve?

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Remember we learned the shifters in previous
videos there’s 5 shifters of demand and

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there’s 5 shifters of supply.

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To understand what happens what happens when
there’s a shift in demand or a shift in

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supply let’s take a look at a scene from
the movie frozen.

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In this scene Princess Ana walks into Wandering
Oaken’s Trading Post and we find out what

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happens when there’s a change in a market.

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“Woo-hoo.”

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“Hm?”

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“Big summer blow out.

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Half off swimming suits, clogs, and a sun
balm of my own invention.”

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Using this example from frozen let’s analyze
the market for sun balm.

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The point of learning supply and demand is
to understand what happens price or quantity

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when there’s gonna be a change in a market.

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So this graph helps us to predict what happens
when we find out there’s gonna be a change.

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The change that happens is that summer suddenly
becomes winter.

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So what’s gonna happen to the supply or
the demand for sun balm?

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Well it’s definitely gonna affect demand
because it’s gonna affect consumers.

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It’s gonna have no effect on supply or the
production of sun balm.

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Now is the demand gonna go up or is it gonna
go down?

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Well of course the demand is gonna go down
because people don’t wanna wear sun balm

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during the winter time they wanna wear it
during the summer time.

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So the demand is gonna decrease or shift to
the left.

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The new equilibrium is right here and so the
price and the quantity is gonna fall.

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“Woo-hoo, big summer blow out.”

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Now it’s time for you to practice.

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I have 6 scenarios right here for hamburgers.

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Your job is to figure out if it’s gonna
be an increase or a decrease in demand or

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supply, what shifter it is, and what happens
to price and quantity for each scenario.

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So get a piece of paper and draw 6 supply
and demand graphs and show on each graph what

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happens for each one of these scenarios.

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And remember for each one of these things
we’re analyzing hamburgers.

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Make sure to pause the video and then I’ll
explain each one, alright?

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Good luck.

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For the first one new grilling technology
would cause a supply to shift to the right

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or increase.

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Now this is supply because this is something
that’s gonna increase the production of

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hamburgers, and remember technology’s the
shifter.

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The graph tells us that price will decrease
and the quantity is gonna increase.

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For number 2, an increase in the price of
chicken sandwiches, a substitute, is gonna

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cause the demand for hamburgers to increase.

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Remember the price of related goods, substitutes
and compliments, is a shifter of demand.

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And if chicken sandwiches are more expensive
that means people are gonna buy more hamburgers

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so the demand for hamburgers shifts to the
right so price goes up and quantity goes up.

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Ah!

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One rugged road under!

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For number 3 if the price of the hamburgers
decreases that’s not gonna shift the curve.

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Remember a change in price does not shift
the curve it moves along the curve.

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So if the price goes down the quantity demand
is gonna increase.

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The quantity supply is gonna decrease and
that’s gonna lead to a shortage.

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Don’t forget price never shifts the curve.

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For number 4 if the price of ground beef a
key resource in the production of hamburgers

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increases that means we’re gonna produce
less hamburgers.

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So the supply will shift to the left, price
will go up and quantity will go down.

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And for the last one if there’s human fingers
found in many restaurants that’s gonna decrease

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the demand for hamburgers, right?

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So the demand shifts to the left, price goes
down, and quantity goes down.

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So a real quick story, one time I was doing
that example in class and had a student who

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said that “It wasn’t gonna be demand it
was gonna be a supply shifter.”

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The supply would go down.

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So I walked up to them I said “Well why
do you think it’s gonna be a supply shifter

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not a demand shifter?”

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And this innocent student says “Well, if
your workers don’t have any fingers then

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that means they can’t produce as much and
so that’s gonna decrease supply.”

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Ah!

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Ah!

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Ah!

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Well….hmmm.

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It’s definitely gonna be a demand shifter
if there’s fingers found in food people

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aren’t gonna buy it, demand’s gonna decrease.

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Now whether you’re in high school or in
college you’re taking microeconomics or

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macroeconomics it’s super important to understand
supply and demand.

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Understanding this graph is not just good
for class it’s also good for life.

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You can predict changes in a market it can
help you if you’re in business or if you’re

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a consumer buying things.

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Cause you know what’s gonna happen to the
price and to the quantity.

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Now I hope this video was helpful, make sure
to take a look at the next video that’s

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gonna explain price control, something called
price ceilings, price floors.

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And take a look at my review app for your
smartphone or tablet so you can get ready

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for the next test, alright?

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Till next time.