Demand Notes
Demand: Quantities
of a particular good or service consumers are willing and able to buy at different possible prices at a particular time
Warm Up: I’m going to sell an A on the next test. Each
student is to submit a sealed bid. The
bids are cumulative.
What behavioral relationship do you see?
Law of Demand/Price effect:
Consumers buy more of something if it costs less and less of something if it costs more
Two sub-concepts to Demand:
A. Quantity: Consumers are able and willing to buy @different
prices
B. Price: When prices increase people
buy less
Demand Curve: Is Illustrated as an upward sloping curve with Quantity on the horizontal axis and Price on the Vertical axis
A change in Demand means at every price different quantities will be supplied
Demand Is a Forecasting Device:
By anticipating consumer behavior if one incentive changes (price)
Change in Demand is not always a change in Quantity demanded
A. A change in quantity demanded is caused by price indicated
by movement along the curve
Ie. Quantity
is a street and only a change in price can move you up and down the
street
B. A change in quantity demanded is indicated as a shift of the curve
itself
Ie. A change in demand determinants like income, tastes, number of buyers, prices of
complementary or substitute goods, or consumer expectations moves you to a different street
What does it matter?
Businesses need to know and beware
that:
Only a decrease in prices can increase
quantity demanded
The only way to raise prices is to
have an increase in demand
Supply Notes
Supply:
The relationship between price and quantity of goods or services firms are willing to produce.
Warm Up: How many of
you would do 20 good push ups for an extra credit point on the Supply and Demand Test?
For 2 Extra Credit Points
For 3 Extra Credit Points
For 4 Extra Credit Points
Law of Supply: The
higher the price, the greater the quantity supplied
Two sub concepts:
A. Quantity : What producers are willing to provide at given
prices
B.
Price: When
items cost more, producers produce more. When items cost less, producers produce
less
Supply Curve:
Illustrated as an upward sloping curve with Quantity on the horizontal
axis and Price on the Vertical axis
A change in supply means at every price different quantities will be supplied
Supply is a Forecasting Device:
It anticipates what producers will do if a single incentive (Price) is changed
A change in supply is different from quantity supplied
A. A change in quantity supplied is caused by price. It is movement along
the curve itself
Ie. Quantity is a street and only a change in price can
move you up and down the street
B.
A change in supply is due to things other than price. It is movement of the curve itself due to:
1. Technology
2. Production costs
3. Taxes
4. Subsidies
5. Expectations
Ie. A change
in demand determinants likeThe ones listed above move you to a different street