Standard SSEMI2a. Define the Law of Supply and Law of Demand.

What is Demand? Definition: The desire, ability, and willingness to buy a product.

Law of Demand The Law of Demand states that: the quantity demanded of a good or service varies inversely with the price Quantity Demanded $ Price $

Remember as Price increases – Demand decreases Demand Schedule A listing (T-chart) that shows various quantities demanded of a particular product. Quantity Demanded Price Remember as Price increases – Demand decreases

Demand Curve Price Demand A graph showing quantity demanded at each and every price in the market. Remember as Price increases – Demand decreases Price Demand Demand Curves ALWAYS point Down Quantity Demanded

Example: Demand for Ice Cream Cones

Let’s Look at how this works.

Now Let’s Look at Supply Remember: We have to think differently!!! We are now the PRODUCER of products NOT consumers!

What is Supply? Supply is the amount of product offered for sale at all possible prices Producers want to make as much money as possible! They are in business to charge as much as they can!

Notice – these arrows are different than demand! Law of Supply: Law of Supply: states that suppliers will offer more for sale at high prices and less at lower prices Notice – these arrows are different than demand! Quantity Supplied Price

Supply Schedule List of the various quantities of a particular product supplied at all possible prices in the market. Quantity Supplied Price For Supply – as Price Increases the quantity supplies will also Increase!

Supply points to the Sky! Supply Curve A graph showing the various quantities supplied at each and every price that might prevail in the market. Supply points to the Sky! Price SUPPLY Quantity Supplied

Supply Schedule

Let’s Look at how this works.

Vocabulary Law of Supply: principle that more will be offered for sale at high prices than at lower prices Law of Demand: Consumers buy more of a good when it’s price decreases and less when it’s price increases