+

Supply and Demand

Why are some goods produced and not others?

+What is Supply?

The amount of a product for sale at all possible prices.

+Law of Supply

Suppliers will offer MORE of a good or service is at a higher price and LESS of the good or service at a lower price.

Price goes up.... SUPPLY goes up

Price goes down.. Supply goes down

+The Supply Curve

The law of supply describes how price affects the PRODUCER

+Factors of Supply

+Factors of Supply

1. Cost of production As costs INCREASE to create the good…. Supply

DECREASES

2. Change in productivity When productivity INCREASES….. Supply INCREASES

3. Change in competition INCREASE in sellers….. Supply INCREASES

+What is demand?

How much of a good or service that consumers are willing and ABLE to buy at different prices.

+Law of Demand

Consumers will buy MORE at a price decrease and LESS when the price increases

Price up….. Demand down Price down….. Demand up

+Demand Curve

The law of demand describes how price affects the consumer.

+Factors of Demand

1. Change in Income As income INCREASES……. Demand INCREASES

2. Price of substitute If there is a similar good for a lesser price… Demand

DECREASES

+Factors of Demand Cont’d

3. Price of complimentary goods INCREASE in price of complimentary good… DECREASE in

demand of original good.

4. Change in number of consumers INCREASE in population….. INCREASE in demand

+Final Factor of Demand

5. Change in Preference

+Equilibrium Price

So how do the consumers and producers agree? Equilibrium is the perfect price to entice both in a

competitive market