1. Obj. 7.7 Supply, Demand & Price

2. Key Questions:- How does Price affect supply and demand
Key Questions:- How does Price affect supply and demand? How does supply and demand affect price?

3. WHAT to produce and HOW MUCH to produce is determined by supply and demand.

4. The Law of Supply

5. Supply is the amount of a product that producers are willing to make at different prices.

6. Law of Supply
When the price is high, producers are willing to supply more product
WHY??

7. When the price is low, producers make less $ and supply less
Law of Supply
When the price is low, producers make less $ and supply less
WHY??

8. Yo-Yo’s Notice as price increases, so does supply Price
(consumer is willing to pay)
Supply
(amount producer is willing to make)
$1.00 10
$2.00 40
$3.00 70
$4.00
140
Notice as price increases, so does supply

9. 140

10. The Law of Demand

11. Demand is the amount of a G/S consumers are willing to buy at different prices.

12. Law of Demand
When the price is low, more consumers want to buy the product, the demand is high

13. Law of Demand
When the price is high, fewer consumers are willing to buy the product, demand is low

14. Fleischer’s Yo-Yo’s Notice as price increases, Demand decreases
Price (consumer is willing to pay)
Quantity Demanded
$1.00
100
$2.00 90
$3.00 70
$4.00 40
Notice as price increases, Demand decreases

15. 140

16. Together supply and demand determine the best price of a product

17. 140

18. Market Price
The market price is the price at which buyers and sellers agree to trade.
The market price will be where the demand and supply is equal

19. market price
140

20. How do changes in supply & demand effect price?

21. prices will be LOW (S↑D↓=P↓)
When supply is high and demand is low there will be a SURPLUS of the product
Producers will want to sell as much of the product as possible to get rid of the surplus
prices will be LOW (S↑D↓=P↓)

22. price will be HIGH (S↓D↑=P↑)
When supply is low and demand is high there will be a shortage of the product
Because the product is hard to get, consumers will be willing to pay more
price will be HIGH (S↓D↑=P↑)