A. Amount of a good that is bought at a price 1. Ex. 100 IPods at $250 and 1000 sold at $75 B. Demand can be influenced by a variety of variables 1. Price 2. Popularity 3. Novelty 4. Need

C. Demand is not to be confused with wants. D. Demand can be seen on a demand curve Price $3 $2 $1 $0

E. Demand can be increased by an increase in buying power 1. Buying power is the cost goes down so your money buys more. 2. Example: You have $10. A gallon of gas goes from $2 down to $1

F. Demand is also effected by Diminishing Marginal Utility 1. Diminishing Marginal Utility is when each unit consumed is less enjoyable 2. Ex. Eating 1 or 2 burger compared to eating 10 burgers

G. Market Demand 1. The demand of everyone in the market 2. Ex. The total number of slices of pizza that your class wants to eat. 3. Each person’s demand varies within the market demand

H. Price Elasticity of Demand 1. Measures how much the demand has changed due to the change in price 2. Ex. For every $10 you raise the price of an IPod, you lose 3 sales.

I. Changing the demand 1. Prices of complimentary goods a. Complimentary goods are two goods that go together (Ex. Peanut Butter and Jelly) b. When the price of peanut butter goes up, the demand for jelly and peanut butter both go down

2. Substitute goods- a good you buy instead of another a. If the price of a good goes up, the demand for the substitute goes up b. Ex. The price of Hefty Trash Bags goes up so you buy the Target brand bag. 3. Seasons can change demand for goods a. Ex. Sales of ice cream go up in the summer

4. Personal preferences or styles change a. Ex. Bell-bottoms and Parachute pants were once popular, now the demand is almost non- existent for these things.

A. Supply- the amount that producers are willing to supply at a given price 1. The Law of Supply- the higher the price the more suppliers will produce B. Supply is predominantly affected by the price and cost of production

C. Supply is illustrated by a Supply Curve Price $3 $2 $1 $0

D. Market Supply 1. The amount supplied by all of the suppliers 2. Each company supplies different amounts of a product E. Price Elasticity 1.How much the supply is affected by a price change 2. Ex. 100 IPods at $50 or 1000 IPods at $100

F. How Supply is Affected 1. The price directly affects how much a producer is willing to supply a. If the price is too low, they won’t bother 2. New businesses increase the supply a. Ex. Adding a new burger place increases the amount of burgers

3. Cost of Production affects supply a. If it cost too much they won’t make it 4. Demand directly affects the supply a. The more people want, the more the producers will make

A. Supply and Demand both affect each other 1. The goal is to get the Equilibrium price (Where supply and demand intersect) Price $3 $2 $1 $0

B. How they interact 1. The higher the price- The more supplied a. Which lowers the demand b. This creates a surplus and there are goods left over

2. The lower the price- the less supplied a. There is a higher demand b. This creates a shortage and there is not enough to go around

B. How does the Law of Supply and Demand affect your everyday life? 1. Prices of the goods you buy 2. The amount of goods you buy 3. Can even affect the number of jobs