Supply and demand

Supply and demand

Supply

Supply is the willingness and ability of the producers to sell at any given price, all other factors constant.

The law of supply states that an increase in price results in an increase in quantity supplied.

Multiple Choice

Supply is

• The willingness and ability of consumers to sell at any given price, all other factors held constant.

• The willingness and ability of producers to sell at any given price, all other factors held constant.

• The higher the price, the higher the quantity supplied.

Demand

Demand is the willingness and ability of a consumer to purchase a good or service at a given price level.

The law of demand states that an increase in price results in a decrease in quantity demanded, all other factors held constant. This is an inverse relationship.

Multiple Choice

The law of demand is that...

• An increase in price results in a decrease in quantity demanded, all other factors held constant.

• The willingness and ability of consumers to purchase a good or service at a given price level.

• An increase in quantity demanded will result in an decrease n price.

Multiple Choice

There is an inverse relationship between price and quantity demanded.

• True

• False

Movements

As price changes we can see changes in quantity. We track these by MOVING along the curve.

Expansions are when quantity increases, due to a change in price (movement right).

Contractions are when quantity decreases, due to a change in price (movement left).

Multiple Choice

The price of bananas increases. On a supply curve, this will result in a movement...

• Right (expansion)

• Left (contraction)

Multiple Choice

An expansion or contraction (movement) is always directly linked to a change in price (a price factor).

• True

• False