1. Supply and Demand DemandSupply Business and Labor

2. Demand Demand The desire, willingness, and ability to buy a good or service  you must WANT a product The desire, willingness, and ability to buy a good or service  you must WANT a product Demand schedules organize the quantity of a product that someone is willing to buy at a range of possible prices Demand schedules organize the quantity of a product that someone is willing to buy at a range of possible prices Demand can be shown using a graph  demand curve Demand can be shown using a graph  demand curve Demand Schedule PriceQuantity $500 $401 $301 $202 $103 $55

3. Demand Law of Demand  Quantity demanded and price move in opposite directions (the higher the price, the lower the demand and vice versa) Law of Demand  Quantity demanded and price move in opposite directions (the higher the price, the lower the demand and vice versa)

4. Demand Individual vs. Market Demand Companies are interested in what everybody wants, not just one person Companies are interested in what everybody wants, not just one person Market Demand  the total demand of all consumers Market Demand  the total demand of all consumers Everything we buy has a utility (satisfaction we get from product) Everything we buy has a utility (satisfaction we get from product) After a while, we get less and less pleasure from a product, the more we use it  diminishing marginal utility After a while, we get less and less pleasure from a product, the more we use it  diminishing marginal utility This is why a demand curve slopes down- consumers are unwilling to pay a high price for something that does not bring as much pleasure This is why a demand curve slopes down- consumers are unwilling to pay a high price for something that does not bring as much pleasure

5. Demand Factors affecting Demand When demand goes down, people are willing to buy fewer items at a certain price  curve shifts to left When demand goes down, people are willing to buy fewer items at a certain price  curve shifts to left

6. Demand When demand goes up, people are willing to buy more of the same item at any given price  curve shifts to right When demand goes up, people are willing to buy more of the same item at any given price  curve shifts to right

7. Demand Factors affecting Demand 1. Changes in number of Consumers  more consumers, more demand 1. Changes in number of Consumers  more consumers, more demand 2. Change in consumers’ income  more income, more demand 2. Change in consumers’ income  more income, more demand 3. Change in consumers’ taste  more popular, more demand 3. Change in consumers’ taste  more popular, more demand 4. Change in consumers’ expectations  way ppl. think about future 4. Change in consumers’ expectations  way ppl. think about future 5. Change in substitutes  demand changes in competing products change (computers) 5. Change in substitutes  demand changes in competing products change (computers) 6. Changes in complements  products that are used together (DVD and DVD player) 6. Changes in complements  products that are used together (DVD and DVD player)

8. Demand Elastic vs. Inelastic Demand Sometimes demand is elastic- demand for a product responds greatly to a change in price (Cars) Sometimes demand is elastic- demand for a product responds greatly to a change in price (Cars) Demand is inelastic when price changes have very little effect on the demand for the product (Medicine) Demand is inelastic when price changes have very little effect on the demand for the product (Medicine)

9. Supply What is Supply? Supply is all the quantities of goods/services producers are wiling to sell at all possible prices  opposite of demand Supply is all the quantities of goods/services producers are wiling to sell at all possible prices  opposite of demand Buyers demand different numbers of goods based on the selling price of an item Buyers demand different numbers of goods based on the selling price of an item Law of Supply  As the price goes up, the quantity supplied rises, as the price goes down, the quantity supplied lowers Law of Supply  As the price goes up, the quantity supplied rises, as the price goes down, the quantity supplied lowers Supply can be represented in a chart and a graph, like demand Supply can be represented in a chart and a graph, like demand Supply Schedule PriceQuantity $50100 $4090 $3070 $2030 $1010 $51

10. Supply A supply curve slopes upward  suppliers are willing to offer mores goods/services at a higher price and fewer at a lower price A supply curve slopes upward  suppliers are willing to offer mores goods/services at a higher price and fewer at a lower price Businesses hope to make a profit- money received for its product above the amount spent for cost Businesses hope to make a profit- money received for its product above the amount spent for cost Price is the most significant influence on the quantity supplied Price is the most significant influence on the quantity supplied

11. Supply Changes in Supply Supply increases and decreases depending on certain factors Supply increases and decreases depending on certain factors When supply goes down, the supply curve moves to the left When supply goes down, the supply curve moves to the left

12. Supply When supply goes up, the supply curve moves to the right When supply goes up, the supply curve moves to the right

13. Supply Factors Affecting Supply Cost of the resource- when cost of the factors of production go up or down Cost of the resource- when cost of the factors of production go up or down Productivity- if a business is more efficient, it will save money and supply will go up Productivity- if a business is more efficient, it will save money and supply will go up Technology Technology Change in Government Policy- gov’t makes new laws/regulations affecting price or productivity, supply goes up or down Change in Government Policy- gov’t makes new laws/regulations affecting price or productivity, supply goes up or down

14. Supply Elasticity of Supply A measure of how the quantity of a good changes in response to a change in price A measure of how the quantity of a good changes in response to a change in price If quantity changes a lot, product is elastic, if not, it is inelastic If quantity changes a lot, product is elastic, if not, it is inelastic

15. Business and Labor Three Types of Businesses 1. Proprietorship- a business owned and operated by a single person Pros: Flexibility- you are your own boss Cons: Financial responsibility  unlimited liability; difficult to raise capital; finding employees 2. Partnership- a business owned by 2 or more ppl. Pros: Make more money Cons: Complex legal structure; owners have unlimited liability (assume all debts) 3. Corporations- Business recognized by the federal government  must have a charter (gov’t permission) to start corporation, certain number of stocks, stockholders, and a board of directors Pros: Easy to find capital; become huge; limited liability  the company, not individual, pays for debts Cons: Expensive; business owners have little say in running company

16. Business and Labor Labor Unions Groups of workers who band together to have a better chance of making more money and better working conditions Groups of workers who band together to have a better chance of making more money and better working conditions 2 types of unions: craft unions(perform the same skills), industrial unions(work in the same industry) 2 types of unions: craft unions(perform the same skills), industrial unions(work in the same industry) Closed Unions require you to join if you work for a particular company; Union shops allow companies to hire non union people, but they must join once they are hired Closed Unions require you to join if you work for a particular company; Union shops allow companies to hire non union people, but they must join once they are hired Right-to-work states prevent mandatory union membership Right-to-work states prevent mandatory union membership

17. Business and Labor Labor unions negotiate in different ways Labor unions negotiate in different ways Collective Bargaining: Co. boss and Union boss negotiate Collective Bargaining: Co. boss and Union boss negotiate Mediation: Bring a 3rd party into talks, give advice Mediation: Bring a 3rd party into talks, give advice Arbitration: 3rd Party decides disagreement Arbitration: 3rd Party decides disagreement When negotiations break down, unions use different techniques When negotiations break down, unions use different techniques Strike or Boycott  management can lockout employees; court order injunction to prevent strike Strike or Boycott  management can lockout employees; court order injunction to prevent strike

18. Business and Labor Responsibility of the Business Consumer- sell quality products that are safe Consumer- sell quality products that are safe Owners of the business- reveal financial info to stockholders (transparency) Owners of the business- reveal financial info to stockholders (transparency) Employees- safe workplace, treat workers without discrimination Employees- safe workplace, treat workers without discrimination