1. Supply and Demand

2. Who’s the boss?
The “marketplace” in a market economy is run by 2 distinct groups of people…Consumers and Producers
Consumers: People who buy and use goods and services
Producers: individuals and organizations that provide goods and services for sale

3. Consumers and Demand
Consumers make decisions about what to purchase using their “dollar votes”
When consumers cast “dollar votes” for something, they create demand
Demand: the amount of a good or service that consumers are willing and able to buy at a given price
In other words… are people buying it???

4. The Demand Curve Demand can be easily measured using a graph
The Demand curve always slopes down from left to right
Price is measured going up the graph
Quantity is measured going across

5. Price and Quantity Demanded
The demand curve shows the relationship between the price of a product and the quantity demanded…
As price goes up…the quantity demanded goes down…

6. Demand and Price
If a good or service is popular…it will have an increased demand
There’s an increased demand for pumpkins in October…
There’s a decreased demand for shorts in December…
There’s an increased demand for convertibles in the spring…
When demand for an item is high…the price usually increases, and vice versa

7. Producers and Supply
Producers make decisions about what to supply based on what consumers are buying
If consumers are demanding an item, producers will supply it
Supply: the amount of a good or service that producers are willing and able to produce at a given price

8. The Supply Curve Supply can be easily measured using a graph
The Supply curve always slopes upward from left to right
Price is measured going up the graph
Quantity is measured going across

9. Price and Quantity Supplied
The supply curve shows the relationship between the price of a product and the quantity supplied…
As price goes up…the quantity supplied goes up…

10. Supply and Price
If a product is highly demanded, it will have an increased price
Because consumers are willing to pay more…producers are willing to supply more
There’s an increased supply of pumpkins in October…
There’s a decreased supply of shorts in December…
There’s an increased supply of convertibles in the spring…
Producers can charge a higher price for items when their demand is high

11. Other factors influence supply
Sometimes unexpected events outside the marketplace will effect supply
A hurricane, drought, or other natural disaster could effect producers ability to supply
What would happen to the supply of Chevy trucks if the workers who build them go on strike???

12. Determining Market Price
Supply and demand work together to determine the market price of an item
Market Price: the point where supply and demand are equal
At market price:
Consumers are willing to pay the price of an item
Producers are willing to sell the item at that price

13. Market Equilibrium Graph
Market Equilibrium price can be easily seen on a graph of supply and demand
Equilibrium price is where the supply and demand curves cross

14. Supply & Demand Graph
Video Explanation

15. In Closing… Producers offer goods and services for sale…
Consumers are individuals who purchase goods and services
Producers offer supply for sale
Consumers demand items to buy
Market Equilibrium is the place where supply and demand are equal