Download supply, demand and price

SUPPLY, DEMAND AND
PRICE
One of the most basic concepts of
economics is Supply and
Demand.
They are really two separate
things, but they are almost always
talked about together
DEMAND
Demand is the quantity of a good or service
that consumers are willing and able to buy
at a particular price. Since each of us has
different needs and wants, we each have
different demands. When we buy a
particular good or use a particular service,
we are expressing demand for it.
Law of Demand
Consumers buy more as price decreases.
As price increases consumers buy less.
Price
Demand
Four conditions that create demand:
1. Consumers must be aware of and interested
in the product. - advertising
2. Enough supply of product
3. Prices are reasonable and competitive
4. Product must be accessible to consumers.
Four factors that affect demand
(increase or decrease)
1. Changing consumer income – income
increases , people buy more
2. Changing consumer tastes – fashion
changing
3. Changing expectations for the future –
if price to increase – buy more (HST
intro)
4. Changes in population – number of
people, ages
SUPPLY
Supply is the quantity of a good or service
that businesses are willing and able to
provide within a range of prices that
people would be willing to pay.
Law of Supply:
As prices increase, the quantity
supplies will increase.
Price
Supply
Five conditions that affect Supply:
1. Change in the number of producers.
2. Changes in price. – Roses after
Valentines Day
3. Changes in technology. – Able to
produce items more efficiently
4. Changing expectations for the future
5. Changing production costs. – price of
oil
PRICE
Price is determined by both supply and demand and the
cost of producing a good or service.
1. If the demand for a product increases and the supply is
low the price will increase.
Example: Concert, sporting events
2.
If the demand for a product decreases and the supply
is high the price will decrease.
Example: Christmas wrapping paper on Boxing Day