Supply and Demand The Heart & Soul of Market Economics.

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Presentation transcript:

Supply and Demand The Heart & Soul of Market Economics

Adam Smith ( ) Free markets best promote the social welfare Markets are naturally “self regulating” Markets: Allocate scarce resources Price: Determines “For Whom” Supply & Demand: Determines “What is produced” Buyers = Demand Sellers = Supply Wheat Trading Game

Demand The quantity of goods or services that consumers are willing and able to purchase at various prices Law of Demand Inverse Relationship Price Decrease Qty Demanded increases

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