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1-4 Supply and Demand

1-4 Supply and Demand. Goal 1 Describe supply and demand orally and with graphs. Goal 2 Discuss how supply and demand affect prices of products and services. KEY TERMS. Consumer – A person who buys and uses goods and services.

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1-4 Supply and Demand

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  1. 1-4 Supply and Demand Goal 1 Describe supply and demand orally and with graphs. Goal 2 Discuss how supply and demand affect prices of products and services.

  2. KEY TERMS • Consumer – A person who buys and uses goods and services. • Producers – Individuals and organizations that determine what products and services will be available for sale. • Demand – The quantity of a good or service that consumers are willing and able to buy • Supply – The quantity of a good or services that businesses are willing and able to provide. • Market Price – The point where supply and demand are equal.

  3. PARTICIPATING IN A MARKET ECONOMY • Consumers set demand • Producers establish supply • A graphic view

  4. DEMAND AND SUPPLY

  5. Checkpoint  • How does the price of a product affect demand and supply? • As prices decrease, the number of consumers willing and able to purchase the product (demand) will increase. • As prices increase, businesses will be willing to supply larger quantities of the product.

  6. DETERMINING PRICE • Factors influencing demand • If many consumers want (demand) a particular good or service, the price generally goes up. • If fewer consumers want (demand) a particular good or service, the price generally goes down. • When a good substitute good is available, demand stays relatively low • When no good substitute is available, demand remains high

  7. DETERMINING PRICE • Factors influencing supply • If supply is high, price stays low • If supply is low, price will increase • Competition generally increases supply • Lack of competition results in higher prices • Some businesses try to restrict supply in order to maintain higher prices

  8. Factors influencing supply • Determining market price • Supply, demand, and competition all help determine the market price • Look at the following graphs, where is the market price?

  9. MARKET PRICE

  10. Checkpoint  • How is the market price for a product determined? • Supply, demand, and competition determine the market price for a product or service. • The market price is the point at which supply and demand are equal.

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