Transcript Supply and Demand Curves

Supply and
Demand Curves
Law of Demand and Demand
Curve

Law of Demand= Relationship between the quantity demanded
and price is inverse. (They move in opposite directions)

As price increases, quantity demanded decreases.

As Price decreases, quantity demanded increases.
https://www.khanacademy.org/economics-financedomain/microeconomics/supply-demand-equilibrium/demand-curvetutorial/v/law-of-demand
Quantity Demanded and Demand

Change in “quantity demanded” causes movement along the
same demand curve.

Change in demand causes the entire demand curve to shift to the
right or left.

Right=Increase

Left=Decrease
Change in Demand ↓
Determinants of Demand
(Cause a shift in Demand Curve)

Change in population

Change in Income

Change in Taste/Preference

Substitute Goods

Complementary Goods
Elasticity of Demand

A rise or fall in the price of a good greatly affects the amount
people are willing to buy.

What are some examples of goods that have an elastic demand?

Toilet Paper?

Hot Dogs?
Inelastic Demand

Price change doesn’t greatly affect quantity demanded.

Gas- no matter the price, people still need gas.

Electricity

Anything that is essential to every day life most generally is inelastic.
Law of Supply and Supply Curve

Law of supply= There is a direct relationship between price and
quantity supplied.

Price rises=quantity supplied rises

Price falls=quantity supplied falls

Incentive of greater profits causes the production of more goods.
(Increase in supply)

Supply curve- shows the quantity supplied at each possible price.
https://www.khanacademy.org/economics-financedomain/microeconomics/supply-demand-equilibrium/supply-curvetutorial/v/law-of-supply
Supply Curve

Change in “quantity supplied”- caused by a change in price and is
shown as movement along the supply curve.

Change in supply- producers supply more or fewer goods at every
possible price. (Shifts entire supply curve)

These shifts are cause by determinants of supply which are:

Price of Inputs/Cost of Production

Number of businesses in the industry

Taxes on businesses

Technology (better/faster production)
Change in “quantity supplied” vs
change in Supply
Both curves show an increase.
Supply and Demand Together

Equilibrium Price- quantity supplied by sellers is the same as quantity
demanded by consumers.

Shortage- quantity supplied is less than the quantity demanded.
(Not enough goods to satisfy wants/needs)

Surplus- quantity supplied exceeds quantity demanded. (Goods left
over because demand wasn’t great enough)