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-finance-domain/microeconomics/supply-demand-equilibrium/demand-curve-tutorial/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 Change in

Demand ↓ Left=Decrease

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-finance-domain/microeconomics/supply-demand-equilibrium/supply-curve-tutorial/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)