WHAT DETERMINES SUPPLY AND DEMAND Determinants of Demand

Determinants of Demand • Population • Income • Taste and Preferences • Substitutes &

Population • The more people in a place, the more demand for products

Income • When people have jobs, they have more money to spend on goods

Taste and Preferences • When a product becomes popular, the more people want to

Substitutes and Complements • Substitutes—Items that can be used for each other. As the

Determinates of Supply • Price of inputs • Productivity • Technology • Government Policies

Price of inputs • When prices for production decrease, producers can make items at

Productivity • When workers are productive, they can produce more items in a day

Technology • New technology can speed up business and production • Cash registers vs.

Taxes • The higher the taxes…the higher the cost of doing business and less

Government Policies The Gov. can influence supply through policies such as subsidies. Ex. Agribusiness

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WHAT DETERMINES SUPPLY AND DEMAND?

Determinants of Demand • Population • Income • Taste and Preferences • Substitutes & Complements • Government Policies

Population • The more people in a place, the more demand for products

Income • When people have jobs, they have more money to spend on goods and services

Taste and Preferences • When a product becomes popular, the more people want to buy it— Holiday Seasons

Substitutes and Complements • Substitutes—Items that can be used for each other. As the price for one increases, the other’s Demand increases • Complements—Items that are used together. If the demand for one item increases, the demand for the other will increase.

Determinates of Supply • Price of inputs • Productivity • Technology • Government Policies • Taxes

Price of inputs • When prices for production decrease, producers can make items at a lower cost

Productivity • When workers are productive, they can produce more items in a day of work, making more available for sale.

Technology • New technology can speed up business and production • Cash registers vs. Scanners

Taxes • The higher the taxes…the higher the cost of doing business and less money for supplies

Government Policies The Gov. can influence supply through policies such as subsidies. Ex. Agribusiness (The Fed. Gov. pays agribusinesses to produce certain crops)