1. DEMAND & SUPPLY
Ch. 4 & 5.1

2. DEMAND Demand - willingness and ability to purchase products
Law of Demand – Price and demand vary inversely. When P increases then D decreases, and when P decreases then D increases

3. DEMAND SCHEDULE & CURVE Slope: downward and to the right!

4. Change in Quantity Demanded: change in amount purchased in response to a change in price.
Reflects these ideas of demand: law of demand, demand schedule, and demand curve.

5. Change in Demand: Individuals are willing to buy more or less of a product at the same price. This shifts the entire curve! (Shift right = increase , shift left = decrease.)

6. Reasons for a Change in Demand How do they impact the curve?
1. consumer income promotion/laid off
2. consumer tastes likes/dislikes
3. price of related products substitutes/compliments
Substitute = product that can be used in place of other products (butter, margarine)
Compliment = related product where the use of one increases the use of the other. (cameras, film)

7. DEMAND ELASTICITY
Elastic demand - a small change in price causes a large change in quantity demanded (Law of demand, chg. qty. demanded, D. curve & schedule)
Inelastic demand - change in price causes little to no change in quantity demanded. (gas, salt, medicine) things that people need / have to have!

8. Marginalities
Marginal utility - extra usefulness you get from buying one more unit of a product. (satisfaction) [extra burger, article of clothing]
Diminishing Marginal Utility - The more units of a product you buy, the less eager you will be to buy another. (you had enough, too much, tired, bored, or full)

9. SUPPLY
Supply - schedule of quantities offered for sale at all prices in a market.
Law of Supply - Quantity supplied varies directly with its price. When P increases, S increases, when P decreases, then S decreases.
Why is this law so different than Demand? Discuss

10. SUPPLY SCHEDULE & CURVE slope: downward and to the left!

11. Change in Quantity Supplied: Change in the amount offered for sale in response to change in price.
Reflects these ideas of demand: law of supply, supply curve & schedule

12. Change in Supply - Firms produce more or less of a product without changing it’s price. This shifts entire curve! (Shift right = increase , shift left = decrease.)

13. Reasons for a Change in Supply How do they impact the curve?
1. Cost of Inputs declining/increasing
2. Productivity incentives/untrained
3. Technology new/breakdown of equipment
4. Number of Sellers many/few
5. Taxes/Subsidies taxes increase cost /
subsidies decrease cost
6. Expectations future events- positive/negative
7.Government regulations increases cost

14. SUPPLY ELASTICITY
Elastic and Inelastic Supply work the same as Demand. It is based on Production.
If a firm can change production as price changes, it is elastic
If a firm cannot change production as price changes = inelastic short run (may need more capital)

15. DEMAND / SUPPLY GRAPHS assignment
Create 1 demand schedule and curve with the following prices and quantities: (ch.4 sec.1) 
P $= 100, 75, 50, 25 QD = 100, 150, 200, 250
Create 1 supply schedule and curve with the following prices and quantities: (ch.5 sec.1) 
P$ = 45, 35, 25, 15, 5 QS= 20, 40, 60, 80, 100
For each curve : illustrate 2 changes in demand or supply. 1 shows increase in demand/supply, and 1 that shows decrease in demand/supply. (ch.4 sec.2, ch.5 sec.1)
copy