The Law of Supply states that quantity supplied is related to the price of a good or service. Therefore, the higher the price of a good or service the more a producer will produce of it making the supply curve upward sloping. Supply Curve
The Law of Demand and the demand curve represents the amount of good and services that buyers are willing to purchase at various prices, assuming all other factors are constant. As prices decrease of a good consumers buy more making the demand curve downward sloping.
Elastic Demand is the percentage change in one variable by the percentage change in another variable. By this being done the demand for a good or service is more elastic meaning that there ARE substitutes allowing consumers to pay less for the goods.
The Inelastic Demand curve is when the quantity demanded does NOT change much with a change in price. Therefore, some goods and services in which no substitutes are available are generally inelastic. Inelastic Demand
The Equilibrium of Supply and Demand is where the quantity supplied equals the quantity demanded. At the Equilibrium there is no tendency to change. The Equilibrium point is the intersection of Supply and Demand.
As we have noticed, by examining the affects of both the supply curve and the demand curve, they are both related and or dependent upon each other. If the supply of a good or service were to increase or decrease it would affect the equilibrium point, which would in turn then affect the price of the good or service.
Click on the link below to view a video that will explain to you the reasons for the Supply and Demand curves and why they are shaped the way they are. It will also discuss the affects of shifts on the curves which we will cover in the next unit so pay close attention!!!
With the ability of the demand for a partical good such as salt to change, the price may also change. Therefore, by consumers decreasing their consumption of salt the producers will in turn decrease the supply of it. This makes salt a product that has an inelastic demand.