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Mastering Supply and Demand: A Guide to Market Economic Dynamics

Explore the essential concepts of supply and demand in market economics, from the laws governing supply quantities to the impact of price changes and supply curve shifts. Learn about the determinants of supply and how changes in technology, input costs, and the number of sellers affect market dynamics.

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Mastering Supply and Demand: A Guide to Market Economic Dynamics

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  1. Supply and Demand The Heart & Soul of Market Economics

  2. Supply • The quantity of a product or service that a firm is willing and able to sell at various prices Law of Supply Price increases Qty Supplied increases Positive Relationship

  3. Supply and Demandin Action The Motion of a “Free Market”

  4. Supply Changes • There are also 2 types of Supply changes: • 1) Change in Quantity Supplied • or • 2) Change in Supply

  5. Change in Quantity Supplied • When price changes => Qty Supplied Changes • A shift along the existing supply curve

  6. Change in Supply • A Change in Supply leads to a SHIFT in Supply Curve (new supply curve) • A shift occurs whenever a Determinant of Supply changes

  7. Determinants of Supply (TIN) • Technology • Input Costs • Number of Sellers

  8. Change in Supply Change in (TIN) Input Costs Rise

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