SUPPLY, DEMAND AND PRICE

One of the most basic concepts of economics is Supply and Demand One of the most basic concepts of economics is Supply and Demand. They are really two separate things, but they are almost always talked about together

DEMAND Demand is the quantity of a good or service that consumers are willing and able to buy at a particular price. Since each of us has different needs and wants, we each have different demands. When we buy a particular good or use a particular service, we are expressing demand for it.

Law of Demand Consumers buy more as price decreases. As price increases consumers buy less. Price Demand

Four conditions that create demand: 1. Consumers must be aware of and interested in the product. - advertising 2. Enough supply of product 3. Prices are reasonable and competitive 4. Product must be accessible to consumers.

Four factors that affect demand (increase or decrease) 1. Changing consumer income – income increases , people buy more 2. Changing consumer tastes – fashion changing 3. Changing expectations for the future – if price to increase – buy more (HST intro) 4. Changes in population – number of people, ages

SUPPLY Supply is the quantity of a good or service that businesses are willing and able to provide within a range of prices that people would be willing to pay.

Law of Supply: As prices increase, the quantity supplies will increase. Price Supply

Five conditions that affect Supply: 1. Change in the number of producers. 2. Changes in price. – Roses after Valentines Day 3. Changes in technology. – Able to produce items more efficiently 4. Changing expectations for the future 5. Changing production costs. – price of oil

PRICE Price is determined by both supply and demand and the cost of producing a good or service. 1. If the demand for a product increases and the supply is low the price will increase. Example: Concert, sporting events If the demand for a product decreases and the supply is high the price will decrease. Example: Christmas wrapping paper on Boxing Day