Warm Up Explain the law of supply.

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Presentation transcript:

Warm Up Explain the law of supply

Thursday, October 29, 2015 Objective: Students will be able to understand the effect of changes in price on the quantity demanded and quantity supplied. Purpose: Supply and demand are the two things that determine market price.

Equilibrium Equilibrium: the point at which the quantity demanded is equal to the quantity supplied At equilibrium, the market price of a good is stable At the equilibrium price, buyers will purchase exactly as much of a good as firms are willing to sell

Supply and Demand on the Same Graph X-axis = quantity Y-axis = price Equilibrium: located where the supply and demand curves cross

Shortage Shortage: situation in which the quantity supplied is less than the quantity demanded As a result of a shortage, prices will rise Quantity supplied is less than the quantity demanded

Surplus Surplus: situation in which the quantity supplied is greater than the quantity demanded As a result of a surplus, prices will fall Quantity supplied is less than the quantity demanded

Changes to Prices Prices change because... Supply changes Demand changes Supply AND demand change

If Supply decreases…

If Supply increases…

If Demand increases…

If Demand decreases…

Practice Worksheet Each student is to complete the supply/demand graphing worksheet on their own. Use your knowledge gained from today’s lesson and your knowledge about shifts in supply and demand to complete the worksheet. When you are finished with the worksheet, hand it in to me.