Supply and Demand

Economic definitions for DEMAND Demand: the total amount consumers are willing and able to buy at all prices.

Demand curve: the graphical representation of what consumers are willing and able to buy.

Law of Demand: As price increases/decreases, quantity demanded decreases/increases. P Q P Q

Factors that cause demand to change or shift Tastes and fads Income Number of buyers Future price expectations Price and availability of: Substitutes compliments

Inelastic Demand: Price still moves up and down but Demand stays the same

Economic definition for SUPPLY Supply: the total amount of a good or service producers are able to make at all prices.

Supply curve: the graphical representation of a good or service producers are able to make at all prices.

Law of Supply: as price increases/decreases, quantity supplied increases/decreases P Q P Q

Factors that cause a change in supply: Price of land, labor or capital Technology Number of other sellers Price of other goods I could produce Tax policy

Equilibrium Point: the point at which the quantity & the price are equal

IRDL “IRDL” will help you! INCREASE = RIGHT DECREASE = LEFT