Supply and Demand

What is a Market:

  • A market is a setting where potential sellers and potential buyers come together to trade.

  • Markets can be physical or virtual.

  • Some market are very competitive.

  • Other markets have little or no competition.

Types of Markets:

  • Farmers' Market

  • Festival Market

  • National Market

  • International Market

  • Global Market

  • Stock Exchange

  • Black Market

Factors That Affect Supply and Demand:

  • Price

  • Income

  • Population

  • Fashion

  • Laws

  • The Economy

Price:

The Seller

  • Looks for the highest price.

  • Has to cover costs.

  • Needs to make a profit.

The Buyer

  • Looks for the lowest price (Shopping around for the best price).

  • Prices increase and decrease.

Demand:

  • Prices depend on the law of supply and demand.

  • Demand is the amount of goods and services that consumers are willing to purchase for a given price.

  • Low Price - Demand increases

  • High Price - Demand decreases

Supply:

  • The Supple of goods and services is the amount that the supplier is willing to sell at a given time for a given price.

  • High Price - Supply increases

  • Low Price - Supply decreases

  • The supplier is looking for the highest price, to cover costs and to make a profit.

  • Demand is from the consumer's POV.

  • Supply is from the seller's POV.

Income:

  • When income increases, demand for goods increases.

  • When income decreases, demand for goods decreases.

Population:

  • Age Profile can affect demand and supply.

Fashion:

  • Goods that are popular one year may not be in demand the following year.

  • Consumers are fickle about style and tastes.

Law:

  • When a new law is introduced, it can decrease the demand for some products and increase the demand for others.

Our Economy:

  • The Economy is doing well - little unemployment, income increases, people spend more money on items, more likely to go on holidays.

  • The Economy is not doing so good - unemployment increases, people reduce/cut back on spending and overall will be more cautious with their money.

Market Demand Schedule:

  • A Market demand schedule is a table that lists the quantity of goods that consumers will buy at each price.