Supply and Demand

Demand: the quantities that  people are willing to buy and able to buy at various demands.

The Law of Demand: an inverse relationship between price and quantity demands. 

Demand Schedule and Demand Curve: displays the relationship of price and quantity demanded

Increase in demand - shift to the right
Decrease in demand - shift to the left

What causes a change in quantity?
change in prices
What causes a change in demand?

1. change in buyer's taste (advertising)
2. change in the number of buyers (population)
3. change in income A. Normal goods - gods that buyers buy more of when their income rises. B. Inferior goods - goods that buyers buy less of when their income rises. 
4. change in the price of related goods. A. Substitute goods - goods that serve roughly the same purpose to buyers (Coca - Cola and Pepsi) B. Complimentary goods - goods that are often consumed together (fries and ketchup)
5. change in expectations - the future 

Supply:
The quantities that producers or sellers are willing and able to produce or sell at various prices

Law of Supply - There is a direct relationship between price and quantity supply (price increases, quantity increases)

Supply Schedule and Supply Curve

What causes change in supply?
change in price

What causes a change in supply?

1. change in weather
2. change in technology
3. change in taxes or subsidies
4. change in cost of production
5. change in number of sellers
6. change in expectations