Download Supply and Demand

Marketing Co-Op
Supply:
the amount of goods
producers (sellers) are
willing and able to sell
Demand:
the amount of goods
customers (buyers) are
willing and able to buy
As price increases the amount producers
are willing and able to produce increases
P3
The arrows move in
the same direction!!
P2
P1
Q1
Q2
Q3

Cost of production

Number of producers (competition)

Disasters and other big events

Labor union demands

Technology and inventions

Prices of other products
As price increases the amount the
customer is willing and able to pay
decreases
P3
The arrows move in
different directions!!
P2
P1
Q1
Q2
Q3

Tastes and preferences

Number of consumers

Consumer (market) expectations

Substitute goods

Promotion (sales, commercials, customer
awareness)
The degree to which demand for a
product is affected by price
Elastic
Inelastic
A change in price
creates a change is
demand
A change is price has
very little effect on
demand
The point at which consumers will
only buy so much of a given product,
regardless of how low the price is

Equilibrium: when supply and demand are
equal

Shortage: when demand exceeds supply

Surplus: when supply exceeds demand
P3
Demand
Shortage
Equilibrium
P2
Surplus
P1
Supply
Q1
Q2
Q3
Pennies and Paperclips
A rivalry between two or more businesses
to attract scarce customer dollars


Price: using prices to attract customers
Non-price: using anything other than the
sale price of a product
◦ Ex: higher quality, new features, larger assortment

Monopoly: there is only one supplier of a
product (there is no competition)

Lower prices

Better quality products

New, improved products

Choice of where to buy

Wider product selection

More and better customer service