Basic Concepts
Supply and demand are basic concepts of economics.
They are two forces that determine the prices of the goods and services we buy every day.
Being familiar with them can help you better understand the economic world around you.
trade
Trade is the exchange of goods or services between buyers and sellers.
A buyer gives money to a seller in return for a good or service.
The price of a good or service depends on the supply of the seller and the demand of the buyer.
supply
Supply is the quantity of goods or services that sellers have and are willing to sell.
In order for a buyer to purchase a good or service, there must be supply of it.
demand
Demand is the quantity of goods or services that buyers are willing and able to purchase.
In order for a business to sell its products, there needs to be demand for them.
Questions
What happens when a buyer and a seller trade with each other?
> money is exchanged for a product.
In order for a buyer to purchase a good or service,...
>there must be supply of it.
When people start to each healthy food, what will happen to the deman for junk food?
>it will decrease.
The company is increasing supply to meet new demand.
As consumer income rises, there is usually a higher demand for high-end products.
There was not enough demand for their products, so they were forced to cut prices.
Trade is the exchange of goods or services between buyers and sellers.
The price of a good or service depends on the supply of the seller and the demand of the buyer.
market price
The market price is the price at which something is offered in a marketplace.
If consumers think the price of a product is too high, they will not want to buy it, so there will be little demand.
If the price of a product is lower than consumers' expectations, it will be sold quickly at less profit.
surplus
A surplus occurs when the supply of a product is higher than the demand.
If sellers have a surplus of products, they may lower their prices in order to sell more.
shortage
A shortage occurs when there is not enough supply to meet the demand.
During a shortage, sellers may choose to raise the prices in order to make more money.
Questions
What happens when the price of a product is lower than consumers expectations?
>the product will be sold quickly.
If a product doesn't sell well, it may lead to a...
>surplus.
If a company underestimates demand for a product,
> it could lead to a shortage
when would happen to a farm supply of apples if it's apple crop grows well
> it's supply will increase
The market price is the price at which something is offered in a marketplace.
The supermarket had a surplus of pears, so it lowered the price in order to sell them before they went rotten.
At the end of the summer, the store had a surplus of shorts because they didn't sell well.
There's been a shortage of that toy, so some vendors are selling it for three times the price.
The underestimated demand for their new handbags, so there was a shortage.