Supply and demand curves can change for a few reasons. Let’s break it down!
Reasons for Changes in Demand:
Consumer Income: When people earn more money, they tend to buy more things. This is especially true for normal goods, which are items we buy regularly.
Prices of Related Goods: If the price of one item goes up, like butter, people may start to buy more of a similar item, like margarine, because it's cheaper.
Tastes and Preferences: If a new health trend starts, more people might choose to buy organic foods because they think it's better for them.
Reasons for Changes in Supply:
Production Costs: If it becomes more expensive to make something, like if raw materials cost more, there will be less of that product available.
Technology: When new technology comes out that makes production easier or faster, it can lead to more of a product being made.
Number of Sellers: If more companies start selling the same product, there's usually a higher supply of that item.
Imagine a simple supply and demand graph. When the curve shifts to the right, it means there’s more demand or supply. When it shifts to the left, it means there’s less.
Supply and demand curves can change for a few reasons. Let’s break it down!
Reasons for Changes in Demand:
Consumer Income: When people earn more money, they tend to buy more things. This is especially true for normal goods, which are items we buy regularly.
Prices of Related Goods: If the price of one item goes up, like butter, people may start to buy more of a similar item, like margarine, because it's cheaper.
Tastes and Preferences: If a new health trend starts, more people might choose to buy organic foods because they think it's better for them.
Reasons for Changes in Supply:
Production Costs: If it becomes more expensive to make something, like if raw materials cost more, there will be less of that product available.
Technology: When new technology comes out that makes production easier or faster, it can lead to more of a product being made.
Number of Sellers: If more companies start selling the same product, there's usually a higher supply of that item.
Imagine a simple supply and demand graph. When the curve shifts to the right, it means there’s more demand or supply. When it shifts to the left, it means there’s less.