Double+Shifts+AP+MICE

__**Double Shifts **__

Change in Q: Indeterminate Change in P: Decrease Change in Q: Decrease Change in P: Indeterminate Change in Q: Indeterminate Change in P: Increase Change in Q: Increase Change in P: Indeterminate
 * Graph 5=Increase in Supply, decrease in Demand
 * Graph 6=Decrease in Supply, decrease in Demand
 * Graph 7=Decrease in Supply, increase in Demand
 * Graph 8=Increase in Supply, increase in demand

http://www.econport.org/content/handbook/Equilibrium/shifts-graph.html

Remember!

__**Determinants of Supply and Demand**__

A change in DEMAND can result from... 1) Change in income 2) Change in consumer taste or preference 3) Change in price of complementary/ substitute good 4) Change in the number of buyers 5) Change in the price expectation of buyers

A change in SUPPLY can result from... 1) Change in resource price 2) Change in price of goods that use the same resources 3) Change in technology 4) Change in taxes of subsides 5) Change in Price expectations of producers 6) Change in the number of sellers

If a non- price determinant of demand and supply both occur in a common market, then you have a double shift!

__**Application #1: Housing Market**__

An application of double shifts in both supply and demand is seen in today's housing market. Today's state is that there are many houses (supply is high and shifts to right) but at the same time, demand is low (demand shifts to left) because people no longer have money to spend on buying houses because of the recession. This is seen in our first senario above being graph number five. This being, prices of houses are at an all time low currently. Quantity of equilibrium is unknown based on the shift, but most importantly prices of homes are at an all time low.



This funny picture helps to show the current situation of the housing market with demand being low, due to decrease in consumer income, and supply being high because of cheap materials and many workers in the field.

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This website contains information on the double shift that occurred in the home market.




 * __Application #2: Libya and Oil Prices__**

In addition, in very recent news, OPEC member Libya has entered a revolution and a state of political turmoil. Currently, demand for oil is at an all time high as developing countries (change in number of buyers) are being introduced to, and relying more heavily on petroleum products. With this turmoil in Libya, oil supplies are uncertain and may drop as Libya and its neighbor, Algeria, also a member of OPEC, may close their oil markets to the world (Change in number of producers). If this were to occur, demand would be high, and supply would shift left so that oil prices would be very high. This is seen in graph 7 above as a decrease in supply and in increase in demand could raise prices drastically. Quantity of equilibrium remains unknown.

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This site gives info about the current situation in Libya.