1. Demand The desire, ability, and willingness to buy a product
Demand Schedule- shows the amount demanded at every price

2. Demand Curve
Shows the quantity that consumers will demand at each and every price.

3. Law of Demand
Demand is higher at lower prices and lower at higher prices
Inverse relationship

4. Change in Demand vs. Change in Quantity Demanded
People buy different amounts at the same prices
Shows a move (shift) from one curve to the other
Change in Quantity Demanded
Affected by price
Moves along the same curve

5. Non-Price Determinants
Demand is also affected by non-price factors:
Tastes and preferences of consumers
Related goods (prices of the related goods)
Complements
substitutes
Income of consumers
Number of buyers
Expectations of consumers
T R I B E

6. Prices of related goods Substitutes and Complements
Competing products that can be used in place of one another
An increase in the price of one increases the demand for the other
Ex: Coke and Pepsi
Complements:
Products that increase the value of other products
An increase in the price of one reduces the demand for both
An increase in the use of one will increase the use of the other
Ex: computers and software

7. Demand Video Review (7 min.)

8. Check your understanding
Draw a demand curve:
As the price of CDs goes up, does the quantity that you demand go up or down?
This is known as the ________ ___ ________.
What are some factors that might change the demand for CD’s?
CDs
Price 12 $8 10
$10 8
$12 6
$14 4
$16 2
$18
$20

9. Supply
The quantity of goods and services that sellers are willing and able to supply

10. Law of Supply
If prices are high, suppliers will offer greater quantities for sale
If prices are low, they will offer smaller quantities
There is a direct relationship between supply and price
A change in the quantity supplied is often the result of a change in price
How does this conflict with the Law of Demand?

11. Supply Curve
The tendency of suppliers to offer greater quantities for sale at higher prices
“An upward
Sloping curve”

12. Changes in Supply
Changes in supply can occur for non-price reasons. These are the non-price determinants
Resource Costs - Cost of Inputs
Other Goods or other opportunities
Taxes and/or subsidies
Technology and productivity
Expectations
Number of Sellers
ROTTEN

13. Supply Video Review (4 min.)

14. Equilibrium Price Video (5 min.)

15. Prices
Equilibrium price: the price at which the quantity supplied is equal to the quantity demanded. S = D (market is cleared)
Surplus: quantity supplied is greater than the quantity demanded S > D
Shortage: quantity supplied is less than the quantity demanded S < D
Price ceiling: the highest price that can be charged, according to an agent outside the market (NYC rent controls)
Price floor: the lowest price that can be charged according to an agent outside the market (minimum wage)

16. Supply and Demand Graph

17. Increase in Demand (shift line to the right)

18. Decrease in Demand (shift line to the left)

19. Increase in Supply (shift line to the right)

20. Decrease in Supply (shift line to the left)

21. Effect of minimum wage law supply and demand of workers

22. Effect of price ceiling