Supply and Demand Tips- Macro and Micro

Summary

Jacob Clifford offers eight key tips to help students master supply and demand in economics. He explains foundational concepts such as the downward-sloping demand curve, the upward-sloping supply curve, and the importance of equilibrium. Clifford emphasizes the role of price changes in shifting quantities rather than curves, and how external factors can shift demand and supply. He also covers strategies for drawing supply and demand graphs, dealing with double shifts, and using practical examples like hamburgers and fidget spinners to solidify understanding. With engaging visuals and a quiz at the end, this video aims to make economics both accessible and enjoyable.

Takeaways

• 😀 Remember that the demand curve slopes downward, meaning as price goes up, quantity demanded goes down, and vice versa.
• 😀 Supply curves slope upward, meaning as price goes up, the quantity supplied increases, and when price decreases, the quantity supplied decreases.
• 😀 To understand economics, you must consider supply and demand together. They work together to determine the market-clearing price (equilibrium).
• 😀 A change in price does not shift the supply or demand curve; it only moves along the curves, affecting the quantity demanded or supplied.
• 😀 If supply and demand are not in equilibrium, the result is either a shortage or surplus in the market.
• 😀 Factors affecting buyers (consumers) shift the demand curve, while factors affecting producers (sellers) shift the supply curve.
• 😀 There are five main shifters of both demand and supply. Changes in these factors cause the curves to shift, affecting price and quantity.
• 😀 In cases of double shifts (both supply and demand curves shifting at the same time), the change in price is indeterminate, but you can determine the direction of quantity.
• 😀 Drawing out supply and demand graphs is a critical skill. If you struggle with a question, sketch the graph to help visualize the scenario.
• 😀 To excel in economics, consistently practice drawing and analyzing supply and demand graphs in different scenarios, and keep reviewing key concepts using visual aids like the scissors and gallon of milk.

Q & A

What is the primary focus of the video?

The video focuses on providing tips and strategies to help students understand and remember the concepts of supply and demand in economics.

What mnemonic does Jacob Clifford use to help students remember the law of demand?

Jacob Clifford uses a hand motion, where students move their hands downward while saying 'boop-boop' to represent the downward sloping demand curve. This helps them remember that as price increases, quantity demanded decreases, and vice versa.

How does Jacob Clifford describe the law of supply?

Jacob Clifford describes the law of supply with the phrase 'supply goes to the sky' and a sound effect of 'whoo.' This represents the upward sloping supply curve, where as the price increases, the quantity supplied increases.

What is the relationship between supply and demand in achieving equilibrium?

Supply and demand work together to reach an equilibrium, which is the market-clearing price. At this price, the quantity demanded equals the quantity supplied.

What does Jacob Clifford emphasize about price changes in relation to supply and demand curves?

Jacob Clifford emphasizes that a change in price does not shift the supply or demand curves. Instead, it causes a movement along the curves, changing the quantity demanded and supplied.

What is the significance of 'disequilibrium' in the video?

Disequilibrium occurs when the market is not at equilibrium, meaning quantity demanded does not equal quantity supplied. This can result in either a shortage or a surplus, depending on whether demand exceeds supply or vice versa.

What are the five shifters of demand and supply mentioned in the video?

The five shifters of demand include factors like income, preferences, and the prices of related goods. The five shifters of supply involve factors like production technology, the price of inputs, and government policies that affect production.

How should students handle a question with a double shift in supply and demand?

In the case of a double shift (where both demand and supply curves shift), students should draw each graph separately to determine what happens to price and quantity. If the shifts are in opposite directions, the change in price is indeterminate, but the change in quantity can still be determined.

What advice does Jacob Clifford give students when faced with complex economics questions?

Jacob Clifford advises students to 'draw it out' whenever in doubt. By drawing supply and demand graphs, students can more easily visualize how shifts in supply or demand affect price and quantity.

What visual aids does Jacob Clifford use to help students remember supply and demand concepts?

Jacob Clifford uses two key visual aids: scissors (to represent the relationship between supply and demand) and a gallon of milk (to help remember the concept of demand and supply using milk-related examples from previous videos).