1. Market Economies at Work: Supply and Demand

2. Demand
The Desire for a Good or Service and the Ability to Pay for It

3. Law of Demand When Prices Fall Consumers Buy More
When Prices Rise Consumers Buy Less

4. Demand Schedules and Curves

5. The Law of Diminishing Marginal Utility
The Benefit from each Individual Unit Tends to decline

6. Factors Affecting Demand
Income
Market Size
Consumer Taste
Consumer Expectations
Substitutes
Complements

7. The Responsiveness of Consumers to Changes in Price in a Market
Elasticity of Demand
The Responsiveness of Consumers to Changes in Price in a Market

8. What Determines Elasticity
Substitute Goods/Services
Proportion of Income
Necessities vs Luxuries

9. Calculating Elasticity
Businesses Have to Calculate Elasticity
Should they put Products on Sale? Will it increase the Number Sold?
Total Revenue Test: Will Selling More Products at a Lower Price Make you More Money?

10. Supply
The Willingness and Ability of Producers to Offer Goods and Services for Sale

11. Law of Supply
Producers are Willing to Sell More of a Good/Service at a High Price than a Low One

12. Supply Schedules and Curves

13. Cost of Production
Labor Affects Production: Efficiency and Utilization

14. Costs of Production
Fixed Costs
Variable Costs

15. Factors Affecting Supply
Input Costs
Labor Productivity
Technology
Government Action
Producer Expectations
Number of Producers

16. The Responsiveness of Producers to Price Changes
Elasticity of Supply
The Responsiveness of Producers to Price Changes

17. Demand, Supply & Prices

18. Demand > Supply = Shortage Supply > Demand = Surplus
Shortage vs Surplus
Demand > Supply = Shortage
Prices
Supply > Demand = Surplus
Prices

19. Reaching Equilibrium Price
40 Salads
$10 each
Sells only 10
15 Salads
$4 each
50 requests
25 Salads
$6 each
Sells 25
Equilibrium Reached

20. Equilibrium Price in Real Life
Demand or Supply
Equilibrium Price
Demand or Supply
Equilibrium Price

21. Prices as Signals & Incentives
Competitive Pricing
Prices and Producers
Prices and Consumers
$20
$13
Rising Prices?
Enter Market
Falling Prices?
Leave Market
Low Price?
BUY!!!
High Price?
DON’T BUY!!!

22. High Price as Signal to Buy?

23. Intervention in the Price System
Price Ceilings
Price Floors

24. Rationing Resources & Products
World War II (other crises)
Black Markets
Unplanned Results of Rationing, or other government regulation