Demand and Supply

What is demand?

• Demand is the quantity of a good or service that consumers are unwilling to purchase

• Demand is the quantity of a good or service that consumers are willing and able to purchase at a given price and time.

What is supply?

• The price of a specific good or service

• Total amount of a specific good or service available to consumers.

Explain the law of demand.

• The law of demand states that as the price of a good or service increases, the quantity demanded decreases, and vice versa.

• The law of demand states that as the price of a good or service increases, the quantity demanded increases.

Explain the law of supply.

• The law of supply only applies to services, not physical goods.

• The law of supply describes the relationship between price and the quantity of a good supplied in a market.

What is the equilibrium price?

• The equilibrium price is the price at which the quantity demanded equals the quantity supplied.

• The equilibrium price is the price at which there is no demand or supply.

How does an increase in demand affect price and quantity?

• Price and quantity both increase.

• Price decreases while quantity increases.

How does a decrease in supply affect price and quantity?

• Price decreases, quantity increases

• Price increases, quantity decreases

What are the factors that can shift the demand curve?

• Weather conditions, Government regulations, Technological advancements

• Consumer income, prices of related goods, consumer preferences, population demographics, consumer expectations

What are the factors that can shift the supply curve?

• Changes in production costs, technology, government policies, number of suppliers, and expectations of future prices.

• Changes in demand, weather conditions, consumer preferences

What happens when demand and supply are equal?

• Equilibrium is reached

• Excess supply occurs