6.

4 Supply ad

Supply & Demand schedule Demand

Demand Curve Supply schedule Supply curve Equilibrium/Market price

Demand
In the United States the !"rces "! supply and demand #"rk t"$ether t" set prices. Demand is the desire #illin$ness and ability t" buy a $""d "r service. %"r demand t" e&ist a c"nsumer must want a $""d "r service be willing t" buy it and have the resources t" buy it.

Demand Schedule
' demand schedule is a table that lists the vari"us quantities "! a pr"duct "r service that s"me"ne is #illin$ t" buy "ver a ran$e "! p"ssible prices.

Demand Curve
' demand schedule can be sh"#n as p"ints "n a $raph. (he $raph lists prices "n the vertical a&is and quantities "n the h"ri)"ntal a&is. Each p"int "n the $raph sh"#s h"# many units "! the pr"duct "r service an individual #ill buy at a particular price. (he demand curve is the line that c"nnects these p"ints.

*a# "! Demand

(he demand curve sl"pes d"#n#ard. (his sh"#s that pe"ple are n"rmally #illin$ t" buy less "! a pr"duct at a hi$h price and m"re at a l"# price. 'cc"rdin$ t" the law of demand, quantity demanded and price m"ve in "pp"site directi"ns. Supp"se the price "! a m"vie ticket rises by +,. -hat d"es the la# "! demand predict #ill happen. E&plain.

 The law of demand says that price and quantity demanded move in opposite directions. Therefore, when the price of movie tickets rises, the law of demand predicts that people will buy fewer tickets.

'ns#er///

Mr. McInnis is less #illin$ t" buy a ticket t" the ne# 0"nd m"vie #hen tickets are +12.22. Since DEM'3D #as still

Supply Schedule
(he chart that sh"#s the quantity "! a pr"duct pr"duced at a particular price.

Supply Curve

-hen each "! these p"ints is $raphed and then c"nnected by a curve.

Law of Supply
(he la# "! supply states that #hen the price "! a pr"duct $"es up the quantity "! the pr"duct $"es up. (he price "! a pr"duct #ill c"ntinue t" chan$e until supply and demand are equal.

Equilibrium Price
-hen supply and demand are equal the price is called the equilibrium price. Supply and Demand are equal/ It is als" called the market price because the price is determined by the market 4pe"ple #h" buy stu!!5.

Influences on Supply Demand 6ers"nal inc"me Disp"sable inc"me Substitute $""ds C"mplimentary $""ds

 Personal Income 7 be!"re buyin$ "ther $""ds and

Personal and Disposable Income

services pers"nal inc"me must 1st pay !"r necessities "! li!e such as !""d cl"thin$ shelter cl"thin$ and transp"rtati"n. Disposable Income 7 Disp"sable inc"me is the am"unt "! inc"me le!t a!ter payin$ !"r necessities. Disp"sable inc"me is the am"unt "! m"ney available !"r savin$s entertainment and m"re e&pensive pr"ducts.

Substitute $""ds
C"mpetin$ pr"ducts are called substitutes because c"nsumers can use "ne in place "! the "ther. ' chan$e in the price "! "ne $""d can cause the demand !"r an"ther $""d t" chan$e. M"re pe"ple mi$ht by a an"ther $""d because it is similar and cheaper.

Example of Substitute oods with Snea!ers

C"mplimentary $""ds
Complements are pr"ducts that are used t"$ether. ' chan$e in the price "! "ne $""d can cause the demand !"r an"ther $""d t" chan$e. I! the price "! D8D players increases #hat #"uld y"u e&pect t" happen t" the demand !"r D8Ds. E&plain.

'ns#er///
D!Ds and D!D players are complements. The demand for one should move in the opposite direction as the price of the other. Therefore, a rise in the price of D!D players will probably result in a drop in the number of D!Ds demanded.

Examples of Complement oods