1 / 6

SSEMI2: Law of Demand, Law of Supply

SSEMI2: Law of Demand, Law of Supply. As prices rise, the quantity demanded of a good or service will fall People buy less stuff when the price goes up! Or: As prices FALL, the quantity demanded of a good or service will RISE. Quantity. Demand. Prices. Quantity. Demand. Prices.

marlo
Download Presentation

SSEMI2: Law of Demand, Law of Supply

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. SSEMI2: Law of Demand, Law of Supply

  2. As prices rise, the quantity demanded of a good or service will fall • People buy less stuff when the price goes up! • Or: • As prices FALL, the quantity demanded of a good or service will RISE Quantity Demand Prices Quantity Demand Prices Law of Demand

  3. Example: Ms. Yeomans needs some pencils for school • At Walmart, she finds a box of 12 pencils is $1 • This is such a great price she decides to buy 5 boxes! • As she is going to the register she sees that all office supplies are on sale!!! • This is great! She hurries back to grab 3 more boxes! • Why did she buy more? $1

  4. As the price a seller can charge for their good or service rises, the quantity supplied will increase Quantity Prices Supply Law of Supply

  5. Example: • Cardinal Diner makes and sells gingerbread cookies • It costs them 10¢ to make the cookies so they have to charge at least 10¢ for them. • They don’t make any money at this price though so they don’t make very many cookies. • If they can charge 20¢ per cookie they will make 100 cookies to sell • If they can charge 30¢ per cookie they will make 200 cookies to sell • Why do they make more?

  6. How do we know what price will eventually be charged? • We use a Supply schedule and a Demand schedule • A list of quantity supplied and quantity demand at a range of prices • Example: • Chicken sandwiches • At $1 consumers will demand 43 chicken sandwiches but producers will only supply 1

More Related