BUSINESS
FUNDAMENTALS
SUPPLY and DEMAND
SUPPLY AND DEMAND
Supply
 represents willingness to sell

at certain price
 relationship between price

and the quantity...
SUPPLY
Is the quantity of goods or services that

businesses are willing and able to provide
within a range of prices tha...
CONDITIONS THAT AFFECT SUPPLY:
 Change in the number of producers (more

businesses, more supply, decrease in price)

 P...
DEMAND
Is the quantity of a good or service that

consumers are willing and able to buy at a
particular price.
Law of De...
CONDITIONS THAT AFFECT DEMAND:
A change in consumer tastes, awareness

and interest in good or service
Change in consume...
PRICE
is determined by supply and demand

and the cost of production.
SUPPLY AND DEMAND CURVE
Supply Curve
 Law of Supply
 the higher the price of the

product, the more the
producer will su...
SUPPLY AND DEMAND CURVE
Equilibrium is reached when both curves

intersect.
 At this point, the price is just high enoug...
Supply and Demand
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Supply and Demand

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Business Fundamentals - Supply and Demand - BEC 10

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Supply and Demand

  1. 1. BUSINESS FUNDAMENTALS SUPPLY and DEMAND
  2. 2. SUPPLY AND DEMAND Supply  represents willingness to sell at certain price  relationship between price and the quantity supplied (actually sell) Demand  represents willingness and ability to buy at a certain price  relationship between price and quantity demanded (actually buy)
  3. 3. SUPPLY Is the quantity of goods or services that businesses are willing and able to provide within a range of prices that people would be willing to pay Law of Supply: the relationship of increasing the quantity supplied as price increases.
  4. 4. CONDITIONS THAT AFFECT SUPPLY:  Change in the number of producers (more businesses, more supply, decrease in price)  Price of related goods: (cost of IPODs increase the demand for MP3 players increases)  Change in technology: (MP3 technology makes the availability demand for CD Walkmans decrease and the supply of CD walkmans increase)  Change in the cost of production: (the lower the cost of production the more that is produced, consider resources)
  5. 5. DEMAND Is the quantity of a good or service that consumers are willing and able to buy at a particular price. Law of Demand: Consumers will increase the quantity demanded of a good or service as prices decease and the reverse as prices increase
  6. 6. CONDITIONS THAT AFFECT DEMAND: A change in consumer tastes, awareness and interest in good or service Change in consumer income A change in consumer expectations of future market conditions A change in population
  7. 7. PRICE is determined by supply and demand and the cost of production.
  8. 8. SUPPLY AND DEMAND CURVE Supply Curve  Law of Supply  the higher the price of the product, the more the producer will supply Demand Curve  Law of Demand  the higher the price of the product, the less the consumer will demand  Positive relationship with price, the curve is upward sloping  Negative relationship with price, the curve is downward sloping
  9. 9. SUPPLY AND DEMAND CURVE Equilibrium is reached when both curves intersect.  At this point, the price is just high enough so that the quantity people want to buy is equal to the quantity business want to sell  the quantity demanded = the quantity supplied

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