Supply Demand Notes Unit 1

Demand

Is the quantities that people are willing and able to buy at various prices

   The law of demand

  There is an inverse relationship between in price and quantity demanded

   What causes a change in quantity demanded

  Change in price

   What causes a change in demand

  Change in buyers taste ( Advertising)

  Change in number of buyers ( Population)

  Change in income

  Normal goods- goods that buyers by more of when income rises

   Inferior goods- goods that buyers by less of when income rises

  Change in price of related goods

   Substitute goods- goods that serve roughly the same purpose to buyers

   Complimentary goods- goods that are often consumed together

  Change in expectations

·         Supply

   Is the quantities that producers and sellers are willing and able to produce/sell at various points

   The law of supply

  There is a direct relationship between price and supply

   What causes a change in quantity supplied

  Change in price

   What causes a change in supply?

  Change in weather

  Change in technology

  Change in cost of production

  Change in number of sellers

  Change in taxes or subsidies

  Change in expectations