Supply & Demand

Fundamental to Capitalism Interdependence – Businesses rely on customers for $$$ – Customers rely on businesses for their wants and needs Pizza Place – BCI students demand pizza for their lunch – Pizza Place must supply enough pizza to meet deamand

Demand Law of Demand –When the market demands a high quantity of a good or service, the price for that good or service will be had

Demand Depends on a # of things – Price – Price of substitute or complimentary good – Consumers’ Income – Their future expectations about either income or price – Their taste or desire for the good or service – Outside Factors

Demand: Price of Goods Becky just got hired as a lifeguard and has $80 saved to buy 4 swimsuits

Demand: Price of Goods Becky goes to the mall and discovers that swimsuits are $40 a piece. She can either buy 2 today or wait for the price to fall to $20/swimsuit to buy the 4 she needs. $40/ Swimsuit

Demand: Price of Goods Consumers have an idea of what a product is worth in their own head based on: – Past price – Prestige of the product – If they expect the price to go up or down

Demand: Price Price of Substitute Goods – Substitute Good – a good that can be easily replaced by another Coffee can be replaced by tea Coke & Pepsi Going to the movies renting a DVD Price of Complementary Goods – Complementary Good – two goods that are usually used with one another Blue ray player and Blue ray discs

Demand: Consumer Income The more cash someone has to spend the more demand they will have for products We have seen the opposite occur with the recession

Demand: Tastes and Preferences Consumer trends can heavily change the demand for certain products Example: The current health trend has increased the demand for what products or services?

Demand: Tastes and Preferences Advertising – Goal is to change consumers taste – Tell the consumers what they should value

Demand: Demography Demographics change the demand for certain products – Baby Boomers Vacations, Retirement Saving Plans, Adult Diapers – Working Women Pre-prepared meals, professional fashion,

Demand: Outside Factors How will a big snow storm change demand or certain products?

Demand Charting Demand Demand Curve – shows the relationship between price and demand

Demand Open Demand Assignment