[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:00.59,0:00:05.55,Default,,0000,0000,0000,,What I want to do in this video is how supply and / or demand might change
Dialogue: 0,0:00:05.65,0:00:08.59,Default,,0000,0000,0000,,based on changes on some factors of the market
Dialogue: 0,0:00:08.70,0:00:14.58,Default,,0000,0000,0000,,and then think about what that might do to the equilibrium price and equilibrium quantity.
Dialogue: 0,0:00:14.90,0:00:19.21,Default,,0000,0000,0000,,So let's say at some period, this is what the supply curve looks like,
Dialogue: 0,0:00:19.21,0:00:21.32,Default,,0000,0000,0000,,and this is what the demand looks like
Dialogue: 0,0:00:21.40,0:00:23.31,Default,,0000,0000,0000,,and then all of a sudden this thing happens.
Dialogue: 0,0:00:23.33,0:00:28.91,Default,,0000,0000,0000,,A new disease resistant apple is invented what's likely to happen for the next period?
Dialogue: 0,0:00:29.36,0:00:32.28,Default,,0000,0000,0000,,Well a new disease resistant apple being invented,
Dialogue: 0,0:00:32.33,0:00:36.63,Default,,0000,0000,0000,,this is something that clearly impacts the growers and clearly impacts the suppliers.
Dialogue: 0,0:00:36.63,0:00:40.52,Default,,0000,0000,0000,,All of a sudden you'll have fewer apples vulnerable to disease
Dialogue: 0,0:00:40.52,0:00:42.91,Default,,0000,0000,0000,,and so they will be able to produce more apples,
Dialogue: 0,0:00:42.91,0:00:55.93,Default,,0000,0000,0000,,so at any given price point this will shift the quantity of apples supplied up,
Dialogue: 0,0:00:55.93,0:01:05.59,Default,,0000,0000,0000,,or you could say that entire supply curve is shifted to the right or supply goes up,
Dialogue: 0,0:01:05.61,0:01:08.22,Default,,0000,0000,0000,,and obviously, if now we have disease resistant apples
Dialogue: 0,0:01:08.22,0:01:11.66,Default,,0000,0000,0000,,even our minimum price of producing apples is lower.
Dialogue: 0,0:01:11.99,0:01:16.48,Default,,0000,0000,0000,,Now, when we have supply curve shifted this way, shifted to the right
Dialogue: 0,0:01:16.48,0:01:18.95,Default,,0000,0000,0000,,what happens to the equilibrium price?
Dialogue: 0,0:01:18.96,0:01:21.78,Default,,0000,0000,0000,,Well our old equilibrium price was over here,
Dialogue: 0,0:01:22.30,0:01:25.07,Default,,0000,0000,0000,,our new equilibrium price..so this is old one
Dialogue: 0,0:01:25.07,0:01:27.10,Default,,0000,0000,0000,,and this is our new equilibrium price,
Dialogue: 0,0:01:27.32,0:01:30.05,Default,,0000,0000,0000,,we're assuming that the demand has not changed at all
Dialogue: 0,0:01:30.05,0:01:32.25,Default,,0000,0000,0000,,so this is our new equilibrium price
Dialogue: 0,0:01:32.45,0:01:38.01,Default,,0000,0000,0000,,so our new equilibrium price is lower, so the price went down.
Dialogue: 0,0:01:38.23,0:01:42.30,Default,,0000,0000,0000,,And you don't have to, you could've probably reason through that before taking an e-class
Dialogue: 0,0:01:42.30,0:01:44.52,Default,,0000,0000,0000,,But this way you have some way to think about it,
Dialogue: 0,0:01:44.52,0:01:46.71,Default,,0000,0000,0000,,think about how the curves are changing.
Dialogue: 0,0:01:46.89,0:01:48.99,Default,,0000,0000,0000,,Now let's think about this scenario.
Dialogue: 0,0:01:49.01,0:01:54.24,Default,,0000,0000,0000,,So this is before, so all of these examples, this is the graph is what happened before.
Dialogue: 0,0:01:54.26,0:01:57.94,Default,,0000,0000,0000,,the event came out, so this is before
Dialogue: 0,0:01:57.94,0:02:02.37,Default,,0000,0000,0000,,and the studies release on how apples prevent cancer. So what is that likely to do?
Dialogue: 0,0:02:02.37,0:02:04.32,Default,,0000,0000,0000,,Well no one want cancer
Dialogue: 0,0:02:04.35,0:02:07.67,Default,,0000,0000,0000,,and more people would be eager to have apples,
Dialogue: 0,0:02:07.67,0:02:09.28,Default,,0000,0000,0000,,this will change customer preferences.
Dialogue: 0,0:02:09.28,0:02:13.21,Default,,0000,0000,0000,,they will prefer apples even more when they're..when they're at the supermarket.
Dialogue: 0,0:02:13.48,0:02:16.79,Default,,0000,0000,0000,,So this is clearly affecting demand customer preferences
Dialogue: 0,0:02:16.94,0:02:19.79,Default,,0000,0000,0000,,and at the given price customers will want to get,
Dialogue: 0,0:02:20.12,0:02:23.94,Default,,0000,0000,0000,,people will demand higher quantity of apples,
Dialogue: 0,0:02:23.94,0:02:27.12,Default,,0000,0000,0000,,quantity demanded of the apples would go up.
Dialogue: 0,0:02:27.53,0:02:33.81,Default,,0000,0000,0000,,So the demand curve will shift to the right, or you could say that demand would go up
Dialogue: 0,0:02:34.03,0:02:40.85,Default,,0000,0000,0000,,so that's the new demand curve, so here the demand goes up,
Dialogue: 0,0:02:40.87,0:02:44.15,Default,,0000,0000,0000,,and let me write over here in this situation supply went up,
Dialogue: 0,0:02:44.15,0:02:47.39,Default,,0000,0000,0000,,here demand goes up, and what happens to the price?
Dialogue: 0,0:02:47.68,0:02:50.66,Default,,0000,0000,0000,,This is our old equilibrium price
Dialogue: 0,0:02:50.68,0:02:53.19,Default,,0000,0000,0000,,and this is our new equilibrium price
Dialogue: 0,0:02:53.35,0:02:57.66,Default,,0000,0000,0000,,The price is clearly went up
Dialogue: 0,0:02:57.69,0:03:01.19,Default,,0000,0000,0000,,Actually over here, let's think about the quantity too in this first situation
Dialogue: 0,0:03:01.22,0:03:05.36,Default,,0000,0000,0000,,This is our old equilibrium quantity; this is our new equilibrium quantity
Dialogue: 0,0:03:05.40,0:03:09.10,Default,,0000,0000,0000,,Quantity went up which makes sense
Dialogue: 0,0:03:09.10,0:03:12.42,Default,,0000,0000,0000,,If you have fewer apples dying, price went down, more people want to buy it
Dialogue: 0,0:03:12.46,0:03:18.81,Default,,0000,0000,0000,,Here, price went up and what happened to quantity?
Dialogue: 0,0:03:18.84,0:03:23.29,Default,,0000,0000,0000,,Quantity. This is our old equilibrium quantity; this is our new equilibrium quantity
Dialogue: 0,0:03:23.33,0:03:27.25,Default,,0000,0000,0000,,Quantity also went up
Dialogue: 0,0:03:27.27,0:03:30.42,Default,,0000,0000,0000,,More people just want to buy apples; they don't want to get cancer
Dialogue: 0,0:03:30.45,0:03:33.02,Default,,0000,0000,0000,,Now let's think about these scenarios right over here
Dialogue: 0,0:03:33.05,0:03:37.18,Default,,0000,0000,0000,,The pear cider industry launches an ad campaign
Dialogue: 0,0:03:37.54,0:03:42.70,Default,,0000,0000,0000,,For the sake of this, let's assume the same growers who grow apples can also grow pears.
Dialogue: 0,0:03:42.70,0:03:44.34,Default,,0000,0000,0000,,That makes it interesting
Dialogue: 0,0:03:44.36,0:03:46.74,Default,,0000,0000,0000,,So you have a couple of interesting things
Dialogue: 0,0:03:46.74,0:03:50.84,Default,,0000,0000,0000,,By launching this advertising campaign -- we assume it's a good advertising campaign --
Dialogue: 0,0:03:50.86,0:04:01.06,Default,,0000,0000,0000,,this will clearly make demand go up for pear cider relative to apple cider
Dialogue: 0,0:04:01.06,0:04:03.69,Default,,0000,0000,0000,,Most people when they think of cider, they think of apple cider
Dialogue: 0,0:04:03.70,0:04:08.50,Default,,0000,0000,0000,,Now all of a sudden, pear cider comes out. It'll make demand for apple cider go down
Dialogue: 0,0:04:08.51,0:04:16.54,Default,,0000,0000,0000,,So this is, apple cider demand will go down
Dialogue: 0,0:04:16.85,0:04:19.59,Default,,0000,0000,0000,,If the apple cider demand goes down,
Dialogue: 0,0:04:19.59,0:04:22.99,Default,,0000,0000,0000,,the apple cider producers are going to demand fewer apples
Dialogue: 0,0:04:23.30,0:04:31.14,Default,,0000,0000,0000,,This means apple demand will go down
Dialogue: 0,0:04:31.14,0:04:34.39,Default,,0000,0000,0000,,At any given price point, apple demand will go down
Dialogue: 0,0:04:34.40,0:04:38.34,Default,,0000,0000,0000,,So the apple demand curve will shift to the left
Dialogue: 0,0:04:38.46,0:04:41.94,Default,,0000,0000,0000,,I should say at any given price point, the quantity demanded will go down
Dialogue: 0,0:04:41.95,0:04:48.01,Default,,0000,0000,0000,,so the entire curve, the entire relationship will shift to the left
Dialogue: 0,0:04:48.03,0:04:50.73,Default,,0000,0000,0000,,Now that is not all that might happen
Dialogue: 0,0:04:50.75,0:04:52.94,Default,,0000,0000,0000,,because if you think about it from the suppliers' point of view
Dialogue: 0,0:04:52.95,0:04:55.45,Default,,0000,0000,0000,,I don't know if this is really the case, but let's assume
Dialogue: 0,0:04:55.53,0:04:59.22,Default,,0000,0000,0000,,that the farmers who grow apples can also grow pears
Dialogue: 0,0:04:59.25,0:05:03.35,Default,,0000,0000,0000,,Well, they might say, well, now that there's more demand for pears
Dialogue: 0,0:05:03.35,0:05:05.60,Default,,0000,0000,0000,,they're doing this advertising campaign
Dialogue: 0,0:05:05.63,0:05:08.97,Default,,0000,0000,0000,,and probably the price of pears has gone up
Dialogue: 0,0:05:09.01,0:05:12.58,Default,,0000,0000,0000,,They might say, well, I'm going to devote more of my land to pears and
Dialogue: 0,0:05:12.58,0:05:14.62,Default,,0000,0000,0000,,less of my land to apples
Dialogue: 0,0:05:14.64,0:05:24.99,Default,,0000,0000,0000,,And so the apple supply might go down
Dialogue: 0,0:05:25.46,0:05:31.95,Default,,0000,0000,0000,,It also shift to the left. So they're both shifting to the left
Dialogue: 0,0:05:32.36,0:05:34.64,Default,,0000,0000,0000,,Now what is likely to happen here?
Dialogue: 0,0:05:34.64,0:05:38.34,Default,,0000,0000,0000,,The demand went down and the supply went down; they both shifted to the left
Dialogue: 0,0:05:38.72,0:05:41.49,Default,,0000,0000,0000,,Well, here the way I drew it.
Dialogue: 0,0:05:41.49,0:05:45.24,Default,,0000,0000,0000,,This was our old equilibrium price; this is our new equilibrium price
Dialogue: 0,0:05:45.45,0:05:49.24,Default,,0000,0000,0000,,It actually looks the way that I drew it right over here that it did not change
Dialogue: 0,0:05:49.29,0:05:52.34,Default,,0000,0000,0000,,The equilibrium quantity definitely
Dialogue: 0,0:05:52.34,0:05:55.85,Default,,0000,0000,0000,,This was our old equilibrium quantity; this is our new equilibrium quantity
Dialogue: 0,0:05:55.88,0:06:00.00,Default,,0000,0000,0000,,Clearly the quantity went down. It was a bad day for apples
Dialogue: 0,0:06:00.00,0:06:02.98,Default,,0000,0000,0000,,but the price didn't change because at least in the example
Dialogue: 0,0:06:02.98,0:06:06.70,Default,,0000,0000,0000,,we assume that the farmers also produced fewer apples
Dialogue: 0,0:06:06.72,0:06:12.41,Default,,0000,0000,0000,,It turns out that I can have drawn it in multiple ways. Let me draw it in different ways here
Dialogue: 0,0:06:12.46,0:06:14.68,Default,,0000,0000,0000,,So the quantity definitely--
Dialogue: 0,0:06:14.71,0:06:18.04,Default,,0000,0000,0000,,So let's think about other scenarios. Let me draw it slightly different
Dialogue: 0,0:06:18.04,0:06:21.81,Default,,0000,0000,0000,,Let's say that the supply goes down even more dramatically
Dialogue: 0,0:06:21.81,0:06:24.74,Default,,0000,0000,0000,,Let's say that the supply shifts all the way
Dialogue: 0,0:06:24.74,0:06:28.26,Default,,0000,0000,0000,,the supply shifts really far back. Now what happens?
Dialogue: 0,0:06:29.06,0:06:31.68,Default,,0000,0000,0000,,Well now our equilibrium price
Dialogue: 0,0:06:31.68,0:06:38.85,Default,,0000,0000,0000,,because the reduction in supply was more extreme than the reduction in the demand
Dialogue: 0,0:06:39.16,0:06:43.04,Default,,0000,0000,0000,,Now -- and it really depends on how the curve shapes and all that
Dialogue: 0,0:06:43.04,0:06:46.40,Default,,0000,0000,0000,,The main thing is to reason through so as to see what the actually results are
Dialogue: 0,0:06:46.40,0:06:50.29,Default,,0000,0000,0000,,but in this situation, all of a sudden, the price went up,
Dialogue: 0,0:06:50.29,0:06:53.12,Default,,0000,0000,0000,,but the quantity definitely still went down
Dialogue: 0,0:06:53.12,0:06:55.70,Default,,0000,0000,0000,,So in this case, the one thing that you're always going to be sure
Dialogue: 0,0:06:55.70,0:06:59.57,Default,,0000,0000,0000,,is that the quantity went down but the price went up because this effect
Dialogue: 0,0:06:59.61,0:07:05.69,Default,,0000,0000,0000,,The supply went down much more than the demand did. So the price went up
Dialogue: 0,0:07:06.03,0:07:10.13,Default,,0000,0000,0000,,Now I could have done another scenario where maybe
Dialogue: 0,0:07:10.32,0:07:13.38,Default,,0000,0000,0000,,the supply barely barged or maybe the demand went down dramatically
Dialogue: 0,0:07:13.38,0:07:15.89,Default,,0000,0000,0000,,Let me draw it where the supply barely barges
Dialogue: 0,0:07:15.90,0:07:20.02,Default,,0000,0000,0000,,So maybe the supply, it only gets shifted a little bit to the left
Dialogue: 0,0:07:20.03,0:07:22.61,Default,,0000,0000,0000,,So maybe the supply curve looks like this
Dialogue: 0,0:07:22.63,0:07:25.38,Default,,0000,0000,0000,,Now all of a sudden, quantity definitely goes down
Dialogue: 0,0:07:25.38,0:07:29.33,Default,,0000,0000,0000,,So in all of the scenarios, the quantity will go down
Dialogue: 0,0:07:29.41,0:07:32.29,Default,,0000,0000,0000,,But I've just done 3 scenarios where the price could be neutral,
Dialogue: 0,0:07:32.29,0:07:35.81,Default,,0000,0000,0000,,the price could go up or the price could go down. So you actually don't know
Dialogue: 0,0:07:36.07,0:07:38.73,Default,,0000,0000,0000,,what is going to happen to price based on this
Dialogue: 0,0:07:38.74,0:07:42.96,Default,,0000,0000,0000,,You'd actually have to look at the actual curve and see what the new equilibrium prices are
Dialogue: 0,0:07:43.67,0:07:49.59,Default,,0000,0000,0000,,Now let's look at this. The apple pickers unionize and demand wage increases
Dialogue: 0,0:07:49.61,0:07:52.30,Default,,0000,0000,0000,,So this is an issue for the suppliers
Dialogue: 0,0:07:52.49,0:07:56.48,Default,,0000,0000,0000,,So all of a sudden, one of their inputs, one of the costs of production
Dialogue: 0,0:07:56.48,0:07:58.97,Default,,0000,0000,0000,,which is labor has gone up
Dialogue: 0,0:07:58.99,0:08:01.35,Default,,0000,0000,0000,,So the cost of production has gone up
Dialogue: 0,0:08:01.35,0:08:04.02,Default,,0000,0000,0000,,Now at a given price point, they're less profitable
Dialogue: 0,0:08:04.05,0:08:06.61,Default,,0000,0000,0000,,less willing to produce apples
Dialogue: 0,0:08:06.63,0:08:09.78,Default,,0000,0000,0000,,So at a given price point--so we're talking about the suppliers
Dialogue: 0,0:08:10.02,0:08:15.84,Default,,0000,0000,0000,,at a given price point they will supply a lower quantity
Dialogue: 0,0:08:15.84,0:08:21.35,Default,,0000,0000,0000,,So this is going to lower supply
Dialogue: 0,0:08:21.38,0:08:26.52,Default,,0000,0000,0000,,When you lower supply, what's going to happen?
Dialogue: 0,0:08:26.52,0:08:32.00,Default,,0000,0000,0000,,Well your equilibrium quantity, this was our old one, this is our new one
Dialogue: 0,0:08:32.05,0:08:36.43,Default,,0000,0000,0000,,equilibrium quantity definitely goes down
Dialogue: 0,0:08:36.45,0:08:39.67,Default,,0000,0000,0000,,And what happened to the price, assuming nothing changes to the demand?
Dialogue: 0,0:08:39.70,0:08:45.31,Default,,0000,0000,0000,,So this was our old equilibrium price; this is our new equilibrium price; it went up
Dialogue: 0,0:08:45.59,0:08:49.03,Default,,0000,0000,0000,,Quantity went down and price went up
Dialogue: 0,0:08:49.05,0:08:55.43,Default,,0000,0000,0000,,I encourage you to--I should've told you at the beginning to try these for yourself
Dialogue: 0,0:08:55.45,0:08:58.13,Default,,0000,0000,0000,,but I encourage you to try these out with different situations
Dialogue: 0,0:08:58.13,0:08:59.84,Default,,0000,0000,0000,,Think of situations yourself
Dialogue: 0,0:08:59.85,0:09:03.28,Default,,0000,0000,0000,,and even think about different markets other than the apple market