I'm doing an assignment/presentation in economics in sports and I need to know what a supply and demand shift would look like. Can you please explain. 

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pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

To answer this question, you first have to be sure that you are clear on the difference between a shift in supply (or demand) and a change in quantity supplied (or demanded).  A supply curve shows the amount of a product that sellers will be willing and able to sell at any given price.  A demand curve shows how much of the product buyers will be willing and able to sell at any given price.  A movement along the curve simply shows how much more or less producers will sell (or buyers will buy) when the price of the product changes.  A shift in the curve, on the other hand, means that producers will change how much they are willing and able to sell (and buyers will change how much they are willing and able to buy) at any given price. 

With that in mind, let us look at factors that could cause a shift in supply or demand in the world of sports.

Demand can change if:

  • Consumers’ tastes and preferences change.  For example, if Americans feel that football is too dangerous and that it leads to brain damage in the players too often, they might stop wanting to watch football.   This would decrease the demand for football, shifting the demand curve to the left.
  • Consumers’ incomes change.  Assuming that sports are normal goods, consumers will demand more sports if their incomes rise.  For example, we would expect that demand for tickets would have dropped during the economic crash of 2007-8 because people had less money to spend. 
  • Prices of substitute goods.  If consumers can choose between Good X and Good Y, they will demand more of Good Y if the price of Good X rises.  For example, let us imagine that NBA teams can choose between veteran players and players on their rookie contracts.  If the next collective bargaining agreement raises the price of veteran players, teams’ demand for rookies will probably rise.

Supply can change if:

  • The number of sellers changes.  If a sports league expands, creating a new team, the supply of that sport will rise.
  • Sellers’ expectations change.  If sellers think that a certain good will become more popular and will bring in more money, they will want to supply more of it.  For example, if ESPN thinks that college football bowl games are becoming more popular, it might create new bowl games.  This will increase the supply of such games.
  • Taxes or subsidies change.  This generally affects the supply of a given sport in a given city.  For example, the city of Seattle refused to subsidize a new arena for the Seattle Supersonics NBA team.  This caused the Sonics’ ownership to sell to new owners who moved the team to Oklahoma City.  This reduced the supply of professional basketball in Seattle.

All of these are examples of what shifts in supply or demand would look like in the world of sports.

Sources:
sid-sarfraz's profile pic

sid-sarfraz | Student, Graduate | (Level 2) Salutatorian

Posted on

Demand and Supply are the fundamental basics of economics subject. To understand how supply and demand shift would look like in sports, we need to first understand the basics.

Perfect competition exists when there are various numbers of buyers and sellers that nobody can affect the price of the market.

Imperfect competition exists when a single buyer or seller has the power to influence the price on the market.

DEMAND

Demand is the term used to know the quantity of products that is demanded or desired by the buyers at a significant price.

Conditions under which a buyer wants to buy a certain product:-

  • Price of good
  • Income or wealth
  • population
  • preferences
  • prices of substitutes

The relationship between the quantity of products and the price buyers are willing to pay for a certain quantity is known as Demand Relationship.

A Demand Curve is the graphical representation of the relationship between price and quantity.

Shifts in Demand Occur when there is a change in the determinants of demand.

Determinants of Demand are:-

  • Income
  • Preferences
  • Population
  • Substitute for that product

SUPPLY

Supply is the term used to know the quantity of products that can be supplied at a significant price to buyers. Or in short how much can a market supply? Can it cover the demands of buyers etc?

The relationship that the supplier wants to supply the product and at a certain price, is known as Supply relationship.

For example, the number of sports products, an individual would be willing and able to buy each month depends on the price of goods. Assuming only price changes, then at lower prices, a consumer is willing  and able to buy more goods. As the price rises (again holding all else constant), the quantity of goods demanded decreases. 

Hence, The Law of demand shows the relationship between goods and its price, illustrating that the higher the price of a certain good, the lower that good will be demanded by buyers.

Where as, 

The Law of Supply shows the relationship that illustrates that the lower the price of a certain good, the higher it will be demanded by consumers.

A shift in a demand or supply curve occurs when a good's quantity demanded or supplied changes even though price remains the same.

Causes of Shift in a supply curve:-

  • Taxes
  • Technology
  • Weather
  • Prices of factors of production
  • Production decline
  • Number of suppliers 
  • Expected future prices

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