Supply and Demand Economic definitions for DEMAND n

Supply and Demand

Economic definitions for DEMAND n Demand: the total amount consumers are willing and able to buy at all prices at a specific point in time ¨The whole curve

n Quantity demanded: the total amount consumers are willing and able to buy at one price at a specific point in time. ¨One point on the curve

n Demand schedule: the list of the total amount consumers are willing and able to buy at all prices at a specific point in time.

n Demand curve: the graphical representation of the total amount consumers are willing and able to buy at all prices at a specific point in time.

n Law of Demand: As price increases/decreases, quantity demanded decreases/increases.

Factors (determinants) that cause demand to change (shift) n Tastes and fads n Income n Number of buyers (not to be confused with the number of units exchanged in the market)

n Future price expectations n Price and availability of: ¨Substitutes ¨compliments

Inelastic Demand n As price fluctuates up or down, the DEMAND REMAINS CONSTANT.

Economic definition for Supply n Supply: the total amount of a good or service producers are willing and able to make at all prices at a specific point in time (whole curve)

n Quantity Supplied: the total amount of a good or service producers are willing and able to make at one price at a specific point in time (one point on the curve)

n Supply schedule: the list of the total amount of a good or service producers are willing and able to make at all prices at a specific point in time.

n Supply curve: the graphical representation of the total amount of a good or service producers are willing and able to make at all prices at a specific point in time.

n Law of Supply: as price increases/decreases, quantity supplied increases/decreases

Factors (determinants) that chause a change in supply: n Price and availability of land, labor or capital (productive resources) n Technology n Number of other sellers

n Price of other good I could produce n Tax policy (investment credits,

Equilibrium Pointn The point at which the quantity and the price sellers are willing to offer is equal to the quantity and price that the buyers are willing to accept.

IRDL “IRDL” will help you! n INCREASE = RIGHT n DECREASE = LEFT