1.4 Supply & Demand Goals: Describe supply and demand (with graphs) Discuss how supply and demand affect prices of products and services

Participating in a Market Economy A consumer is a person who buys and uses goods and services A consumer is a person who buys and uses goods and services The customer makes the purchase The customer makes the purchase The consumer uses it The consumer uses it Producers are individuals and organizations that determine what products and services will be available for sale. Producers are individuals and organizations that determine what products and services will be available for sale.

Producers and Consumers  Producers are businesses that use resources to develop products and services and provide them to consumers.  The 32 owners of the NFL are producers responsible for providing consumers with professional football.

Producers and Consumers  Consumers purchase goods and services to satisfy their own needs and wants.  The National Football League is the largest live spectator sport in the world in terms of average attendance.  The NFL averaged 67,509 live spectators per game, and 17,282,225 total for the season.

Producers and Consumers Video: Gregg Glassman King of CrossFit Greg Glassman is the producer and founder of CrossFit. Consumers of CrossFit pay entry fees to participate in competitions and pay gym membership dues.

Producers and Consumers  Finding a balance between what producers are willing to produce and what consumers are willing to buy is one of the major challenges of marketing.

The Laws of Supply and Demand  Demand is the relationship between the quantity of a product that consumers are willing and able to purchase and the price.  Supply is the relationship between the quantity of a product that producers are willing and able to provide and the price.

The Laws of Supply and Demand  The law of demand states that when price goes ups demand goes down, and when price goes down demand goes up.  The average price for a ticket to a New York Yankees game is now $72.97 dollars. The league average is $ Will the high cost of tickets reduce the attendance at New York Yankees games?

The Laws of Supply and Demand No Show: Yankees Try to Disguise Empty Seats by Moving Fans Read the Handout on my site: Yankees Disguise Empty Seats

Demand Curve Demand curve illustrates the relationship between the price of a product and the quantity demanded by consumers Demand curve illustrates the relationship between the price of a product and the quantity demanded by consumers

Producers Establish Supply Supply refers to the quantity of a good or service that businesses are willing and able to provide Supply refers to the quantity of a good or service that businesses are willing and able to provide

Supply Curve The Supply curve for a product illustrates the relationship between the price of the product and the quantity businesses will supply The Supply curve for a product illustrates the relationship between the price of the product and the quantity businesses will supply

The Laws of Supply and Demand  The economics of supply and demand can be illustrated by curves on a graph.

The Laws of Supply and Demand  Equilibrium is the point where the supply and demand curves intersect.  Equilibrium is rarely ever achieved. In economics it is more common to have either a surplus or a shortage of goods or services.

The Laws of Supply and Demand  A shortage occurs when demand is greater than supply. When a shortage occurs producers can charge more for their products and still sell all they produce. Apple sold a record breaking number of Iphones with the introduction of the Iphone 6. A total of 74.4 million phone were sold during the Christmas quarter.

The Laws of Supply and Demand  A surplus occurs when supply is greater than demand. Consumers will generally pay less for products that are considered to be surplus. The movie Battleship was a failure at the box office, losing millions. All related Battleship toys were quickly marked down in an effort to encourage sales. Video: Battleship Trailer

The Laws of Supply and Demand Video: Battleship Toy Commercial

Factors Influencing Demand If many consumers want a good/service, its price will increase If many consumers want a good/service, its price will increase When customers cannot find a good substitute for a product they want, demand will be high because they are unwilling to switch to another choice. When customers cannot find a good substitute for a product they want, demand will be high because they are unwilling to switch to another choice.

Factors Influencing Supply The supply of a product will affect price The supply of a product will affect price As the number of competitors increases, so does supply As the number of competitors increases, so does supply Will have to be sensitive to prices charged by competitors Will have to be sensitive to prices charged by competitors When competition is limited, consumer cannot find good alternatives When competition is limited, consumer cannot find good alternatives Prices most likely will be high Prices most likely will be high

Determining Market Price Supply, demand, and competition determine the market price for a product. Supply, demand, and competition determine the market price for a product. The market price is the point where supply and demand are equal. The market price is the point where supply and demand are equal.

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Key Concepts Answer #1-3 Pg. 26 Answer #1-3 Pg. 26 AND AND The questions that are on my website The questions that are on my website Your Assignment Do Pg. 29 #s end of the chapter Do Pg. 29 #s end of the chapter