January 9, 2017 Notes - Supply and Demand
8:02 PM
Supply and Demand
Demand
(An example of a Demand Schedule and Demand Curve)
Demand - The quantity’s that people are willing and able to buy at various process.
Law of Demand - There is an inverse relationship between price and quantity demanded.
What causes a “change in quantity demanded”?
A: Change in price
What causes a “change in demand”?
- Change in number of buyers (population)
- Change in buyers taste
- Change in income
- Normal goods - Inferior goods
4. Change in price of related goods
- Substitute goods - Complementary goods
5 - Change in expectations (future)
Supply
Supply: The quantities that producers or sellers are willing and able to produce and sell at various prices.
The Law of Supply: There is a direct relationship between price and quantity supplied.
But what causes a change in quantity supplied? Again, a change in price.
What causes a change in supply?
1. Change in number of sellers
2. Change in cost of production
3. Change in technology
4. Change in taxes or subsidies
5. Change in weather
6. Change in expectations
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