ECONOMICS
LESSON 5
SUPPLY
AND DEMAND - WHAT IS THERE
WHAT IS WANTED (NEEDED)
NOT EVERYTHING
THATS THERE IS WHATS NEEDED
SUPPLY
AND DEMAND CURVE
-HIGH
PRICES - DEMAND IS LOW, SUPPLY IS HIGH
-LOW PRICES- SUPPLY IS LOW, DEMAND IS HIGH
-EQUALIBRIUM- WHERE SUPPLY = DEMAND (EVERYONE IS SATISFIED)
COMPLEMENTARY
GOODS
GOODS THAT ARE USED TOGETHER
-BUY ONE, EXPECTED TO BUY ANOTHER
EX: CAR/GAS
HOT DOG/BUNS
SUBSTITUTE
GOODS
GOODS THAT CAN REPLACE EACHOTHER
DEMAND
CHANGE FACTOR
1. CHANGE IN CONSUMER
EXPECTED (BUY OUT OF EXPECTATION)
2. CHANGE IN CONSUMER TASTE
3. CHANGE IN THE # OF COMSUMERS IN THE MARKET
4. CHANGE
IN INCOME
5. CHANGE IN THE PRICE OF A SUBSTITUTE GOOD
6. CHANGE IN THE PRICE OF A COMPLEMENTARY GOOD
ELASTICITY
DEMAND CHANGES WITH PRICES
PRICE GOES UP, DEMAND GOES DOWN
INELASTICITY
PRICE
GOES UP OR DOWM, DEMAND DOES NOT CHANGE