Todays lectureDemandThe Law of DemandThe Demand CurveSupplyThe Law of SupplyThe Supply Curve

Demand

Demand is the amount of goods that buyers are willing and able to purchase.

The Law of DemandThe Law of Demand:Quantity demanded rises as price falls, other things constant.

Quantity demanded falls as price rises, other things constant.

The Demand CurveDemand Curve is a graph of the relationship between the price of a good and the quantity demanded.

Price per DVDs (in dollars) A Demand CurveQuantity demanded of DVDs (per week)123456789101112 13$6.005.00 4.00 3.00 2.00 1.00 .50 03.50A Demand TableABCDE $0.50 1.002.003.004.0098642 Price per DVDDVD rentals demanded per week

SupplySupply is the amount of a good that sellers are willing and able to sell.

The Law of Supply:Quantity supplied rises as price rises, other things constant.Quantity supplied falls as price falls, other things constant.

The Supply CurveSupply Curve is a graph of the relationship between the price of a good and the quantity supplied.

The Supply CurveThe supply curve is the graphic representation of the law of supply.The supply curve slopes upward to the right because the relationship between quantity supplied and the price is positiveAs price increases, the quantity supplied increases.SAPAQABPBQB

SummaryWhen the demand curve shifts to the right (left), equilibrium price rises (declines) and equilibrium quantity rises (falls).When the supply curve shifts to the right (left), equilibrium price declines (rises) and equilibrium quantity rises (falls).

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