1. Marketing & Economic Principles
Supply and Demand

2. Free Enterprise
In a Free Enterprise Economy people are able to own & operate businesses in a COMPETITIVE environment with little or no government involvement The market determines __________ through interchange of SUPPLY and DEMAND

3. Free Enterprise
In America, which is a Free Enterprise Economy, the LAW of SUPPLY and DEMAND affects _____________ of goods and services for sale

4. SUPPLY
____________is the ___________that motivates the behavior of SUPPLIERS
The amount of goods and services _________________________ are willing and able to produce and sell
= ______________

5. Law of Supply
Law of Supply is the economic rule that price and quantity supplied move in the ___________ direction
As the price of goods/services INCREASES, the quantity SUPPLIED of that good/service also INCREASES
As the price FALLS, quantity SUPPLIED for the good/service also FALLS

6. = ______________ DEMAND
________________ is the _________ that motivates behavior of CONSUMERS
The amount or quantity of goods and services that _________________ are willing and able to buy at various prices
= ______________

7. Law of Demand
Law of Demand is the economic rule that price and quantity supplied move in _______________ direction
As ________ of goods/services INCREASES, the quantity DEMANDED of that good/service also DECREASES
As the price FALLS, quantity DEMANDED for the good/service INCREASES

8. 3 Conditions for Supply/Demand
The Supply and Demand for goods and services fall into one of the following three (3) conditions:
Surplus
Shortage
Equilibrium

9. Surpluses A SURPLUS of goods occur when _____________EXCEEDS demand
If the price of a product is too high or seems unreasonable to most customers, they may decide NOT to BUY it
Businesses LOWER prices to encourage people to BUY MORE of the product (sales, or special promotions)

10. Surplus Example SNOW SHOVELS
It is Spring and a store has many snow shovels left over from Winter
The PRICE of the snow shovels is lowered significantly because customers no longer need them
The low price encourages customers to buy now in anticipation of next year

11. PRICES are ______________
Shortage
A SHORTAGE of goods occur when customer ___________ EXCEEDS supply
If there are not enough items available for sale, customers are willing to PAY MORE –
PRICES are ______________

12. Shortage Example GROCERY STORE AND AVOCADOES
Bad weather in California during avocado season
Weather severely damages avocado crops
Stores now have fewer avocados

13. Supply & Demand Together
While a higher price makes sellers want to sell more, it makes buyers want to buy less
When the quantity that consumers are willing and able to BUY EQUALS the quantity that producers are willing and able to SELL, the market reaches ______________________
The EQUILIBRIUM POINT is where ___________ producer and consumer are satisfied with the PRICE