1. Demand Amount of goods or services a person is willing and able to buy Must not only want the good, but also be able to pay for it The law of demand states that consumers buy more of a good when its price decreases and less when its price increases.

2. Demand Schedule Market Demand Curve 3.00 2.50 2.00 1.50 1.00.50 0 050100150 200250 300 350 Slices of pizza per day Price per slice (in dollars) Demand

3. Market Demand Curve 3.00 2.50 2.00 1.50 1.00.50 0 050100150 200250 300 350 Slices of pizza per day Price per slice (in dollars) Demand Demand Schedule

4. Supply The sellers side of the equation Supply—the amount producers are willing to offer at various prices at a given time Quantity supplied—the amount producers are willing to offer at each particular price According to the law of supply, suppliers will offer more of a good at a higher price. Price As price increases… Supply Quantity supplied increases Price As price falls… Supply Quantity supplied falls

5. Market Demand Curve Market Supply Curve Price (in dollars) Output (slices per day) 3.00 2.50 2.00 1.50 1.00.50 0 0500100015002000250030003500 Supply 50100150200250300350 Supply Schedule Supply

6. Market Supply Curve Price (in dollars) Output (slices per day) 3.00 2.50 2.00 1.50 1.00.50 0 0500100015002000250030003500 Supply 50100150200250300350 Supply Schedule

9. The point at which quantity demanded and quantity supplied come together is known as equilibrium. Price per slice Equilibrium Point Finding Equilibrium Price of a slice of pizza Quantity demanded Quantity supplied Result Combined Supply and Demand Schedule $.50300100 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $.50 Slices of pizza per day 0 50100150200250300350 Supply Demand $2.00 $2.50 $3.00 150 100 50 250 300 350 Surplus from excess supply $1.50200 Equilibrium Equilibrium Price a Equilibrium Quantity $1.00250150 Shortage from excess demand