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Starter
• What is the law of supply?
Supply And Demand
The students will learn about the
relationship between supply and
demand. You will also learn about
price.
Supply and
Demand
• Supply and
demand work
together to set
prices
• The point where
demand &
supply are
balanced is
called the
Equilibrium
Price
• Surplus is the amount supplied higher than
amount demanded. Surplus means the price
is too high.
• Shortage is the amount by which the quantity
demanded is higher than quantity supplied. A
shortage means that the price is too low.
• A price ceiling is
government set maximum
price that can be charged
for a good or service.
• A price floor is
government set minimum
price that can be charged
for a good or service
Price
• Price helps businesses and
consumers make decisions.
• Price affects what gets produced, how
it is produced, & for whom it is
produced.
• Price favors neither consumer or
producer. It is a compromise between
the two.
• Prices are flexible. They adjust to
changes in supply and demand
Supply and Demand
Graph the demand and supply schedule located below
Quantity of
Jelly
doughnuts
Demanded
Price for
Each
Doughnuts
Quantity of
Jelly
doughnuts
Supplied
Price for
Each
Doughnuts
5
1.25
25
1.25
10
1.00
20
1.00
15
.75
15
.75
20
.50
10
.50
25
.25
5
.25
Graph Questions
1.
2.
3.
4.
5.
6.
7.
What is the equilibrium price?
How does the price affect demand? Supply?
What would happen to the demand curve if I gave
everyone extra credit for buying a doughnut?
What would happen to the supply if the price of sugar
suddenly increased due to a shortage, so that five
fewer doughnuts were supplied ate every price?
Name three factors other that price that affects
demand for a product?
Name three factors other that price that affects supply
for a product?
How is price changed by changes in either supply or
demand