Demand is - the quantities that people are willing and able to buy at various prices.
The Law of Demand: there's an inverse relationship between price and quantity demanded
What Causes a change in quantity demanded: Δ in price
What causes a change in demand?
- Δ in buyer's taste (ads)
- Δ in # of buyers (population)
- Δ in income (normal/inferior goods)
- Δ in price of related goods (complementary/substitute)
- Δ in expectations
Supply is the quantities that producers/sellers willing to produce at various price
The Law of Supply: there is a direct relationship between price and quantity supply
Causes a change in quantity supplied: Δ in price
What causes a change in supply?
- Δ in technology
- Δ in weather
- Δ in cost of production (resources,wages)
- Δ in # of sellers
- Δ in taxes or subsidies
- Δ in expectations
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