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Supply and Demand

Supply and Demand. The Heart & Soul of Market Economics. 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. Supply and Demand in Action.

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Supply and Demand

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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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