1 / 62

Supply and Demand: Understanding Market Dynamics

Learn about supply and demand, demand curves, determinants of demand, supply curves, shifts in supply, and equilibrium price in this informative guide.

woolard
Download Presentation

Supply and Demand: Understanding Market Dynamics

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. WarmUp • How would you describe supply and demand?

  2. Unit II: How Markets Work Part I – Supply and Demand

  3. Demand • The desire, willingness and ability to buy a good or service

  4. Affective Demand • Must want to buy • Must be willing to buy • Must have the resources to buy

  5. What is market demand? • The total amount of demand created by all consumers for a product

  6. Demand Schedule • A table that lists the various quantities of a product that will be bought at different prices

  7. Demand Curve • A graph that shows the amount of a product that will be bought at all possible prices

  8. Direction of the Demand Curve • Downward Slope

  9. What does the law of demand state? • As price goes UP demand goes DOWN and visa versa

  10. What does utility refer to? • Satisfaction

  11. Diminishing Marginal Utility • Principle that additional satisfaction goes down as we consume more of a product

  12. Determinants of Demandchanges in: • Buyers (#of) – changes in population • Income – people earn more they spend more • Tastes – change in popularity or fads • Expectations – feelings of the future • Related goods • Substitutes – goods that can replace others • Compliments – goods that go along with another

  13. Decrease in demand at every price will produce a Left shift in demand curve

  14. An increase in demand at every price will produce a right shift in demand curve

  15. Demand Elasticity • How much demand for a product is affected by a change in price

  16. Factors affecting elasticity • Percentage of Income • Availability of substitutes • Necessity or Luxury • Length of time

  17. Warmup • What is the law of demand?

  18. What is supply? • The various amounts of a good or service that producers will supply at different prices

  19. The Law of Supply • Suppliers will generally offer more for sale at higher prices and less at lower prices.

  20. What does a Supply Schedule illustrate? • How much will be supplied at different prices

  21. Supply Schedule for Video Games

  22. What does a supply curve illustrate? • The amount of a good or service that will be supplied at different prices

  23. In what direction does the supply curve slope reading from left to right? • Upward

  24. What can cause a shift in supply at every price?

  25. The Cost of Resources • The materials used to produce

  26. Productivity • How efficient the work force is

  27. Technology • The methods used to make goods and services …..and Now Then….

  28. Government Policies • Gov regulations increase costs of production

  29. Taxes • Higher taxes = higher costs • Lower taxes = lower costs

  30. Subsidies • Government payment to help do something (decreases costs)

  31. Expectations • What owners believe demand will be

  32. Number of Suppliers • More suppliers = more supply • Less suppliers = less supply

  33. Shift in Supply

  34. When market supply increases at every price the supply curve shifts to the • Right

  35. Now suppose the government increases taxes on the industry. • It will decrease • Label this on the graph assuming that 100 less will supplied label it S3

  36. What does supply elasticity mean? • How much supply is affected by a change in price • Elastic Supply – quantity changes a great deal when price changes • Inelastic Supply – quantity changes little when price changes

  37. What affects the elasticity of supply? • How quickly a company can change how much it produces

  38. Equilibrium Price • The price at which the amount demanded is equal to the amount supplied Pe Qe

  39. What is the equilibrium price of video games in our market? • $25

More Related