2.02 Supply and Demand Take notes on the underlined sentences. 02.00 Understand Economics and Economic Systems 02.02 Interpret supply and demand graphs

The Marketplace The commercial world The  realm of  business,  trade,  and economics.

Supply How much of a good or service a producer is willing and able to produce at different prices. Supply is produced by the businesses in hopes of making money.

Demand An individual’s need or desire for a good or service at a given price. Individuals are willing to consume more of product or service at a lower price. When the demand is high, competitors see opportunity in the market.

Equilibrium Price (Market Price) Draw on your note page and label. Supply Curve Equilibrium/ Market Price Demand Curve

Supply and Demand Graphs People draw supply and demand graphs so that they can easily see the relationship between the supply and the demand. A supply and demand graph is a visual representation of supply and demand. The graph shows changes in a product’s demand or supply. The graph can help predict the performance of the product over time.

When Supply and Demand Meet Equilibrium Point: The price and quantity point at which the supply and demand curve meet. (ADD THIS TO YOUR NOTES). When the price is above the equilibrium price, fewer people are willing to buy—the price is too high. When the price is below equilibrium price, many people are willing to buy a lot of the product—the price is too low. Suppliers may not be able to make enough money to cover costs.

Equilibrium Price (Market Price) Supply Curve Equilibrium/ Market Price Demand Curve

Price The amount at which a good or service will be sold in a market. The prices of goods and services dictate what products are developed, made, improved or modified. When the price is high, demand falls and businesses produce fewer goods. When the price is low, demand rises and businesses produce more goods to meet the demand.

Competition is sparked Sellers have a rivalry to get customers’ business. Their goal is to make a profit. If a person sees that they can meet a need or a want, they enter the marketplace They compete with other businesses already meeting the need or want. OR They make a new product and competition follows when others enter the marketplace.

Profit and Profit Motive Profit Motive: The desire to make a profit. This is what encourages people to enter the marketplace. Profit is the reward for people who take risks by entering the marketplace.