Directions: Fill in the blanks on the first two slides and answer the questions in the space provided to the rights of the slides.

How Is Price Affected by Supply and Demand?

Supply of a Product Supply and Price have an inverse relationship – 3

Consumer Demand for a Product Demand and Price have a direct relationship – 4

Historical Scenario #1 In the early 1900s, Henry Ford perfected the assembly line for his Ford Motor Company. –How did the assembly line affect the supply of cars in the U.S.? –How did the assembly line affect the demand of cars in the U.S.? –How did the assembly line affect the price of cars in the U.S.? 5

Historical Scenario #1 6

Historical Scenario #2 During the 1920s, societal values changed. Americans voted for the prohibition of alcohol, which was enacted with the 18 th amendment to the U.S. Constitution. –What does prohibition mean? –How did this impact the supply of alcohol? –How did this impact the demand of alcohol? –How did this impact the price of alcohol? 7

Historical Scenario #2 8

Historical Scenario #3 During WWII, the government limited the supply of consumer goods available to U.S. citizens (such as rubber, pantyhose, butter, meat, sugar, and gasoline). –What were these limits called? –What was the purpose of these limits? –How did these limits affect the price of these goods? –How did the government control the people’s demand for these goods? 9