1. Supply and Demand

2. Demand
DEMAND: the quantity of a good or service that consumers are willing and able to buy at a particular price
How does prices effect demand?
LAW OF DEMAND:
If prices  consumers buy more so demand 
If prices  consumers buy less so demand 

3. Conditions that Affect Demand
QUICK BRAINSTORM IN SMALL GROUPS (of 4-5 people)
Come up with 4 things that you think AFFECT demand. Try to think of reasons your decisions of whether or not to buy something may change over time.
Changing consumer income
Changing consumer tastes
Changing expectations for the future
Changes in population

4. Conditions that Create Demand
Customer Awareness
Supply
Price
Accessibility
Factors that Can Affect Demand
Change in consumer income
Change in consumer tastes
Change in future expectations
Change in population

5. Supply
SUPPLY: quantity of a good or service that businesses are willing and able to provide within a range of prices that people would be willing to pay
How does price affect supply?
LAW OF SUPPLY
As price  supply 
(businesses willing to make more)
As price  supply 
(businesses willing to make less)
LAW OF SUPPLY
Businesses satisfy people’s needs and wants by providing goods and services at a profit.
Efficient businesses produce more, with the same resources, than less efficient ones.
As prices for a product or service increase, produces can use the increased revenue to provide more goods and services.
More revenue means a business can pay more overtime, expand factories, hire more employees, and buy more productive equipment.
Several conditions affect supply:
Occasionally, demand for a new good or service is created by supplying it for sale in the marketplace, and marketing as well.
See table 1.3 for “Factors That Can Increase or Decrease Supply”
RELATING PRICE TO SUPPLY AND DEMAND
When consumer demand is high while supply is low, prices will tend to be high.
When consumer demand is low while supply is high, prices will tend to be low.
Because demand and supply constantly change, prices tend to fluctuate.
High prices usually decrease the quantity demanded.

6. Conditions that Affect Supply
the cost of producing or providing a good or service
the price consumers are willing to pay for it
Factors that change Supply
Number of producers
Changes in price
Changes in technology
Changing expectations for the future
Changing production costs

7. Chart of Supply, Demand & Price

8. Equilibrium: when supply and demand are equal
This is the goal of the economy

9. Relating Price to Supply and Demand
Price is determined by supply and demand as well as the cost of producing or providing the good or service.
If demand is high while supply is low, price will be high
If demand is low and supply is high, price will be low
LAW OF SUPPLY
Businesses satisfy people’s needs and wants by providing goods and services at a profit.
Efficient businesses produce more, with the same resources, than less efficient ones.
As prices for a product or service increase, produces can use the increased revenue to provide more goods and services.
More revenue means a business can pay more overtime, expand factories, hire more employees, and buy more productive equipment.
Several conditions affect supply:
Occasionally, demand for a new good or service is created by supplying it for sale in the marketplace, and marketing as well.
See table 1.3 for “Factors That Can Increase or Decrease Supply”
RELATING PRICE TO SUPPLY AND DEMAND
When consumer demand is high while supply is low, prices will tend to be high.
When consumer demand is low while supply is high, prices will tend to be low.
Because demand and supply constantly change, prices tend to fluctuate.
High prices usually decrease the quantity demanded.

10. Old School Clip

11. Practice Statement True? False? Explain
If supply is high, prices will go down X
Competition keeps prices high
Consumer decisions do not affect the economy
Knowing demand helps a business to decide how much of a good to produce x
If demand is high, prices will go down
Prices will go up people willing purchase more
Unemployment affects demand
People will have less disposable income and less willing to purchase items for pleasure (want).
Lower production costs decrease profits