Supply and demand determine the price of goods and services in a market. Supply represents the quantity that producers are willing to sell at a given price, and is impacted by factors like production costs and the prices of related goods. Demand represents the quantity that consumers are willing and able to purchase at a given price, and can change due to consumer tastes, income levels, and population changes. The equilibrium price is reached when the supply and demand curves intersect, where the quantity supplied equals the quantity demanded.

1. BUSINESS
FUNDAMENTALS
SUPPLY and DEMAND

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. 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. 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. 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. 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. PRICE
is determined by supply and demand
and the cost of production.

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. 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