Econ 240 1st Edition Lecture 8Outline of Last Lecture I. The main influences on selling plans that change supply are:II. Prices of Related Goodsa. A substitute in production is good that can be produced in place of another goodb. A complement in production is a good that is produced along with another goodIII. Prices of Resources and Other InputsIV. Productivitya. Productivity is output per unit of inputV. Expectations Number of Sellers a. Market equilibrium occurs when the quantity demanded equals the quantity suppliedOutline of Current Lecture II. If Demand ChangesIII. If Supply ChangesIV. If Demand and Supply Both Change Current LectureIf Demand Changes - Event:Suppose a new study says that bottled water is safer for health then tap water - Result: Demand for battle water increases ◦ Increases in demand => demand curve shift rightward◦ At $1.00, shortage => price rises◦ Equilibrium quantity increases - Event: Suppose a new zero calorie sports drink is invented These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- Result: Some people will switch to the new drink, so demand increases ◦ Decreases in demand => demand curve shifts leftward ◦ At $1.00, surplus => price falls If Supply Changes- Event: New company starts producing bottled water - Result: More suppliers => Supply of bottled water increases ◦ Increase in supply => supply curve shift rightward◦ At $1.00, surplus => price falls ◦ Equilibrium quantity increases - Event: Suppose drought rises up some springs - Result: The supply of bottled water decreases ◦ Decrease in supply => supply curve shifts leftward ◦ At $1.00, shortage => price rises ◦ Equilibrium quantity decreases If Demand and Supply Both Change - Increases in demand => demand curve shift rightward - Increase in supply => supply curve shift rightward - equilibrium quantity increases- Equilibrium price might rise or fall- Decrease in demand => demand curve shift leftward - Decrease in supply => supply curve shift leftward - Equilibrium quantity decrease - Equilibrium price may rise or fall