Supply and Demand Unit 4 Economics Part 1

Supply and Demand Unit 4 – Economics Part 1

What is DEMAND? �Quantities of a product consumers are willing and able to buy at various prices

What is a DEMAND SCHEDULE? �A table listing that shows the quantity demanded (of a product) at all prices that might occur in a market at a given time.

Demand Schedule - Tacos Price Per Taco $5 Number of Tacos Demanded by Consumers 100 $4 200 $3 300 $2 400 $1 500

Price of Taco s $5 Demand Curve - Tacos $4 $3 $2 $1 100 200 300 400 Quantity of Tacos 500

Facts About a Demand Curve Law of Demand : There is an opposite relationship among price and quantity. �When the price goes down, we buy more. �When the price goes up, we buy less. �Demand curves are always downward-sloping.

Things That Affect Demand (besides price) Consumer income �If consumers are earning less, they may not buy many luxury goods. Consumer tastes �Fashion trends change frequently. Prices of substitutes �Butter—margarine Prices of complementary goods �Razor handles, razor blades

What is Supply? �Supply is the schedule of product quantities that sellers will offer for sale at every possible price.

Supply Schedule - Tacos Price Per Taco $5 Number of Tacos Supplied 450 $4 350 $3 250 $2 200 $1 100

Supply Curve - Tacos $5 $4 $3 $2 $1 100 200 300 400 500 Quantity of Tacos Produced

Facts About a Supply Curve Law of Supply – there is a direct relationship between the quantity supplied, or offered for sale, and the price. � When the selling price goes up, sellers are willing to produce and sell more. � When the selling price goes down, sellers want to produce less. � Supply curves are always upward-sloping � Complete a supply curve

Things That Affect Supply (besides price) �Cost of inputs �Technology �Number of sellers �Taxes and subsidies �Government regulations

Equilibrium is the point where the supply curve and demand curve intersect �Generally, a price high enough for a profit, but low enough that consumers are willing to buy

Price of Taco s Equilibrium- Tacos $5 $4 $3 $2 $1 100 200 300 400 Quantity of Tacos 500

Conclusion �The most accurate predictions are that the best price for the tacos is______ �Producers should make about ____ tacos �Revenue = ____ (price x quantity) �____________the chances of having a _______ (too much) or _____of _____ a product �Surplus will result in tacos having to be thrown away or reduced in price to sell! �A shortage will result in frustrated customers who will go elsewhere