1. Introduction to Business & Marketing
Supply & Demand
Introduction to Business & Marketing

2. Review! What type of mixed economy do we have in the United States?
Capitalism
Capitalism is based on the principles of _____.
Free Enterprise
Free enterprise is based on the concept of _____.
Supply & Demand

3. Task 40
Explain supply, Law of Supply, demand, Law of Demand, and economic equilibrium.

4. Supply & Demand SUPPLY DEMAND
the amount of goods that producers are willing to make & sell
the consumer willingness and ability to buy products

5. Law of Supply When prices are high, supply will rise.
The arrows go in the same direction for supply! P3 P2 P1 Q1 Q2 Q3

6. Think About It…
What factors influence the supply of a product or service?

7. Factors that Affect Supply
Costs (Resources)
Competition
Natural Disasters
Economic Changes
Government Intervention
Technology
Cost of Production – RESOURCES
Number of Producers – BUSINESS COMPETITION
Natural Disasters – Eggo waffles plant
Economic Changes – recession (hybrids) vs. prosperity (SUVs)
Government Intervention – interest rates; war time
Technology – more production when it is easier/faster to make

8. Name something that is currently in high supply but low demand.

9. Law of Demand When prices fall, demand will rise.
The arrows go in different directions for demand! P3 P2
The arrows move in different directions! P1 Q1 Q2 Q3

10. Law of Demand
When shirts go on sale, you might buy three instead of one.
The quantity that you demand increases because the price has fallen.
The opposite is true if the price increases.
The arrows move in different directions!

11. Think About It…
What factors influence the demand for a product or service?

12. Factors that Affect Demand
Consumer trends/fads
Consumer expectations (hype, pre-orders)
Available substitutes (juice instead of soda)
Quality of promotion (marketing!)
Economic changes (recession vs. prosperity)
Natural disasters (Harvey, Irma, Maria)
Government intervention ($8k incentives to buy homes)
Consumer Preferences – trends, fads
Consumer Expectations – hype; pre-ordering Harry Potter books or video games
Substitutes – other products that can replace another; buying juice instead of soda
Promotion – sales, commercials, customer awareness
Economic Changes – recession (Honda) vs. prosperity (Hummer)
Natural Disasters
Government Intervention – housing market example ($8,000 incentive to buy homes)

13. Name something that is currently in Low supply but high demand.

14. Graphing Practice

15. Task 41
Describe the impact of supply & demand on a free enterprise system.

16. The Impact of Supply & Demand
Surplus supply > demand
Shortage supply < demand
Equilibrium supply and demand are equal
Demand
Supply P3 P2
Equilibrium is the goal because it is the point of maximum profit for a business. P1 Q1 Q2 Q3

17. Think About It… Why is economic equilibrium important?
Equilibrium is the goal because it is
the point of maximum profit for a business.
Equilibrium is the goal because it is the point of maximum profit for a business.

18. Effects on the Economy
If there is a shortage, this means that there is less supply from producers than there is demand from the consumer. Who has more control over the market? The buyer or the seller?
If there is a surplus, this means that there is more supply from producers than there is demand from consumers. Who controls the market?
Seller!
Shortage – seller’s market
Surplus – buyer’s market
Buyer!

19. Impact on Industry
Consider the market for hot chocolate. Describe how supply or demand would change based on each event.

20. What’s your favorite color M&M?
Shortage, Surplus or Equilibrium
Each students needs a handout and one fun size bag of M&Ms.