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The Market Forces of
Supply and Demand
Chapter 4
Today in Class
Bellringer – take out your notebook for
the bellringer
 Take out your vocabulary
 Outline for Unit – Chapter 4
 Notes – Supply and Demand
 Complete all flashcards

Markets
A
market is a group of buyers and sellers
of a particular good or service.
 The terms supply and demand refer to the
behavior of people . . . as they interact
with one another in markets.
 And Economics, especially
Microeconomics is about how supply and
demand interact in markets.
Demand

Combination of desire, ability, &
willingness to buy a product

A microeconomic concept
Part of economics that studies small units,
such as individuals & firms
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Demand Illustrated

Involves two variables
 Price
 Quantity of a specific product

Demand depends on certain things
 # of people living in area, # and types of related goods,
and consumer tastes & preferences
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Demand Curve
Price of
Ice-Cream
Cone
$3.00
2.50
2.00
1.50
1.00
0.50
0 1
2 3 4 5 6 7 8 9 10 11 12
Quantity of
Ice-Cream
Cones
Why does the Demand
Curve Slope Downward?

Law of Demand
Inverse relationship between price and
quantity.

Law of Diminishing Marginal Utility.
Utility is the extra satisfaction that one
receives from consuming a product.
Marginal means extra.
Diminishing means decreasing.
Demand Curve
Price of
Ice-Cream
Cone
$3.00
2.50
2.00
1.50
1.00
0.50
0 1
2 3 4 5 6 7 8 9 10 11 12
Quantity of
Ice-Cream
Cones
Ceteris Paribus
Ceteris paribus is a Latin phrase that
means all variables other than the
ones being studied are assumed to be
constant. Literally, ceteris paribus
means “other things being equal.”
The demand curve slopes downward
because, ceteris paribus, lower prices
imply a greater quantity demanded!
Demand Schedule: Subway
Sandwiches
Price
Amount
$ 20.00
$ 15.00
$ 8.00
$5. 00
$ 4.50
$ 3.00
$ 2.00
0 sandwiches
0 sandwiches
1 sandwich
2 sandwiches
3 sandwiches
5 sandwiches
10 sandwiches
Demand Schedule Practice

Choose a product that you would like to produce.
 Album on iTunes, or YA Novel (I.E. The Hunger Games)


Create 7 “prices” for your product.
Ask your classmate how many of your product they would buy for that
price, and all of your other prices.
PRICE
$
$
$
$
$
$
$
AMOUNT
Market Demand
Market
demand refers to the sum of
all individual demands for a
particular good or service.
Graphically, individual demand
curves are summed horizontally to
obtain the market demand curve.
Market Demand Schedule
$30
Andrew’s
Demand
0
Alex’s
Demand
0
25
0
1
20
1
2
15
3
3
10
5
5
5
8
7
Price
Market
Demand
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