Demand, Supply, and Prices

Dr. T. D. Mitchell

Bonneville High School

Idaho Falls, Idaho

Demand, Supply, and Prices

• Concept Review• Demand is the willingness to buy a good or a service

and the ability to pay for it.• Supply is the willingness and ability to produce and sell

a product.

• Key Concept• The equilibrium price is the price at which quantity

demanded and quantity demanded.

Seeking Equilibrium: Demand and Supply

• Objective• Explore market equilibrium and see how it is reached.• Explain how demand and supply interact to determine

equilibrium price.• Analyze what causes surplus, shortage, and

disequilibrium.• Identify how changes to demand and supply affect the

equilibrium price.

The Intersection of Demand and Supply

• The market place is where demand and supply interact.

• The market moves to equilibrium.

• Equilibrium price

• Market Demand and Supply Schedule

The Intersection of Demand and Supply

• Market Demand and Supply Curve

Reaching the Equilibrium Price

Surplus, Shortage, and Equilibrium

• Surplus

• Shortage

• Price Ceiling

• Price Floor

The Problem with Disequilibrium