Supply and Demand

What are the 6 shifters of demand?

Number of buyers, incomes, consumers’ tastes, expectations, prices of related goods (substitutes and complements), and government intervention (like taxes and subsidies.)

What are the 6 shifters of supply?

Technology, other goods (substitutes and complements), number of sellers, expectations, resource costs, and government intervention (like taxes and subsidies.)

Role of price in the curve

Moves along the supply and demand curves, does not impact it.

Higher demand

Higher quantity, higher price

Lower demand

Lower quantity, lower price

Higher supply

Higher quantity, lower price

Lower supply

Lower quantity, higher price

Lower equilibrium price

Quantity demanded will increase, quantity supplied will decrease. This is called a shortage.

Higher equilibrium price

Quantity demanded will decrease, quantity supplied will increase. This is called a surplus.

What is quantity supplied?

Quantity supplied is the number of a product sold for a certain price. Ex: if businesses sold 4 pencils for $6, the quantity is 4.

What is quantity demanded?

Quantity demanded is the number of a product demanded for a certain price: Ex: if people wanted to buy 4 pencils for $6, the quantity demanded is 4.

What happens in equilibrium price?

Supply and demand matches the needs of buyers and sellers. So does quantity supplied and demanded.