Unit 1 Notes: Demand and Supply (1/12/15)

Demand:

Demand Schedule:
Oranges

Demand Curve:

• Demand is: the quantities that people are willing and able to buy at variable prices.

• The Law of Demand: there is an inverse relationship between price and quantity.

(Price goes up, Quantity goes down) (Price goes down, Quantity goes up)

• What causes a "change in quantity demanded"? 

Change in price. 

• What causes a "change in demand"?

1.) Change in buyers taste. (advertisers)

2.) Change in number buyers. (population)

3.) Change in income

Normal Goods- Goods buyers buy more of when income rises.

Inferior Goods- Buyers buy less of when income rises. 

4.) Change in price of related goods. 

Substitute Goods- Serve roughly same purpose to buyers. (Ex. Coca Cola, Pepsi)

Complimentary Goods- Often consumed together (Ex. Automobile,Gas; French fries,Ketchup)

5.) Change in expectations- thinking of future. (Ex. Next week, next month) 

Supply:

Supply Schedule:

Yards

Supply Curve: 

• Supply is: the quantities that producers/sellers are willing and able to produce/sell at various prices.
• The Law of Supply: There is a direct relationship between price and quantity supply (Price goes up, Quantity goes up) (Price goes down, Quantity goes down)
• What causes a "change in quantity supplied"? 

Change in price.

• What causes a "change in supply"? 

1.) Change in weather.
2.) Change in technology.
3.) Change in taxes/subsidies.
4.) Change code of production.
5.) Change number of sellers.
6.) Change in expectations.