1. Standard
SSEMI2a.
Define the Law of Supply and Law of Demand.

2. What is Demand?
Definition: The desire, ability, and willingness to buy a product.

3. Law of Demand
The Law of Demand states that: the quantity demanded of a good or service varies inversely with the price
Quantity Demanded
$ Price $

4. Remember as Price increases – Demand decreases
Demand Schedule
A listing (T-chart) that shows various quantities demanded of a particular product.
Quantity
Demanded
Price
Remember as Price increases – Demand decreases

5. Demand Curve Price Demand
A graph showing quantity demanded at each and every price in the market.
Remember as Price increases – Demand decreases
Price
Demand
Demand Curves ALWAYS point Down
Quantity Demanded

6. Example: Demand for Ice Cream Cones

7. Let’s Look at how this works.

8. Now Let’s Look at Supply
Remember: We have to think differently!!! We are now the PRODUCER of products NOT consumers!

9. What is Supply?
Supply is the amount of product offered for sale at all possible prices
Producers want to make as much money as possible! They are in business to charge as much as they can!

10. Notice – these arrows are different than demand!
Law of Supply:
Law of Supply: states that suppliers will offer more for sale at high prices and less at lower prices
Notice – these arrows are different than demand!
Quantity Supplied
Price

11. Supply Schedule
List of the various quantities of a particular product supplied at all possible prices in the market.
Quantity Supplied
Price
For Supply – as Price Increases the quantity supplies will also Increase!

12. Supply points to the Sky!
Supply Curve
A graph showing the various quantities supplied at each and every price that might prevail in the market.
Supply points to the Sky!
Price
SUPPLY
Quantity Supplied

13. Supply Schedule

14. Let’s Look at how this works.

15. Vocabulary
Law of Supply: principle that more will be offered for sale at high prices than at lower prices
Law of Demand: Consumers buy more of a good when it’s price decreases and less when it’s price increases