Supply and Demand

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When there is an overflow of
supply, there will be a
downward pressure on price.

6" 738(19935%:11(&%(/+01&%,+-, The Law of substitution states that

if the prices keep increasing,
competition will appear when
similar products are being sold at
a lower price.

;" 735&'81/%410+&+35&%43%53<%=>10<%<,1% The market, a group of buyers

103538*" in this case, decides what
prices are for goods. The
market in its other forms is
fundamental to the economy.

?" @532+5-%418=54%,1)(&%=%A'&+51&&%<3% For example, of you are looking to

410+41%,32%8'0,%3$%=%-334%<3% be the competition : if the original
product is still popular but expensive,
(/34'01" you’d know to make a lot of that
product, but at a cheaper price.

B" #$%418=54%+&%,+-,.%(/+01&%2+))%-3%4325"
When the quantity consumers
demand is high, the prices will
go down.

C" D818()3*815<%=>10<&%418=54" When consumers are

unemployed, they will have less
money to spend. That could put
producers out of business, thus
more unemployment.
E" F321/%(/34'0935%03&<&%410/1=&1%
When the quantity that is
(/3G<&" produced goes down, the
price does as well.

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!
!
Demand Curve for CellPHN Co.
160

140

120

100

Prices for cell phones 80

60

40

20

0 50 100 150 200 250 300 350 400

!
Quantity of cell phones each month
Q6'(!,0!$0.!(6)*R!@0.2,!6'88&*!(0!8#)%&!'*,!N.'*()($!,&-'*,&,!)3!(6&!@0#R&#1!@60!-'R&!%&22860*&1!
@6&*!0*!1(#)R&S!

Since that would mean the supply went down, the prices will increase. When
there is a shortage in supply, there will be an upward pressure on price.
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8463.:&/,-=&3468<5-4.&A1BB&.<33B>&B-..&62&/,-&3468<5/C&
&
"#$!%#&'()*+!'!1.882$!%.#/&!$0.#1&234!
!
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@)22)*+!(0!8'$!'!20(!03!-0*&$!(0!+&(!0*&>!T#0,.%&#1!(6&*!1&(!(6&!8#)%&!/&#$!6)+6!'*,!1.882$!-'*$!)*!0#,&#!
(0!R&&8!.8!@)(6!,&-'*,!'*,!-'R&!'1!-.%6!-0*&$!'1!8011)C2&>!!
!
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)*/&*(0#$>!
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!
Supply Curve for NewToy Co.
!!!!!E415-&0=8&H<33B>&264&%-A+6>&'6C!
! ! ! ! 320 ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

!0/-! E415-! G<0=/1/>&H<33B1-8! 280

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

X0/&-C&#! :GGD! !D==!(0$1! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

240 ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

5&%&-C&#!! :;FD! YD=!(0$1!

200
A'*.'#$! :;ID! <==!(0$1!
B&C#.'#$!! :;=D! ;D=!(0$1! 160

! Price
! 120
!
80

40

0 80 160 240 320 400 480 560 640

&
& Quantity Supplied
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!
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8&082&!*0!20*+&#!@'*(&,!(6&!(0$!$0.!-',&S!
!
The demand goes, down, the supply goes down, then the price will go down.
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!
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!
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! ! ! !
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X0/&-C&#! :GD=! ;==!(0$1! D==!(0$1!

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!
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!
! Equilibrium Point for NewToy Co.
!
! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !
250
! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

200 ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !
150
! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

Price ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

100 ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !
50
! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! 0 140 280 420 560 700

!
! Quantity
Q6'(!)1!(6&!-'#R&(!&N.)2)C#).-!8#)%&S!
!
The market equilibrium price is $175.
!
!
Q6'(!6'88&*1!(0!1.882$!'*,!,&-'*,!'(!:;==S!
!
! There is a shortage. The supply
! does not meet the demands.
!
Q6'(!6'88&*1!(0!,&-'*,!'*,!1.882$!'(!:G==S!
&
There is a surplus. The supply exceeds the demands.
 BBI 20O

Supply and Demand In The News

INSTRUCTIONS

Find one current article which deals with DEMAND or SUPPLY. If you are lucky,
you may find one article which deals with both.

In other words, find an article that talks about how prices change when demand
or supply changes or how events that are occurring in the world (market
conditions) affect the supply or demand for a specific product.

Print your article and answer the following questions:

• What business(es) are involved?

• How are they being affected?
• What is changing – price, supply, and/or demand?
Explain why you think the changes are occurring.
• What is happening in the world to cause prices, supply or demand to
change?
• How are consumers affected by any changes in the market?
• Do you think the change is short-term or long-term? Explain why you
think this and speculate (guess) how long the change will continue.
• What can the businesses involved do to stay stable and to achieve further
success?
• For the future of businesses and consumers do you think the changes are
posi:ve or nega:ve? Explain your reasoning.
Supply and Demand Newspaper Assignment
Assessment Rubric
!

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