Law of Demand: economic rule which states that the quantity demanded, and price move in opposite directions

As price goes , quantity demanded goes

As price goes , quantity demanded goes

Law of Supply: Economic rule which states that an increase in supply leads to a decrease in price while a decrease in supply leads to an increase in price.

Rule stating that the additional satisfaction a consumer gets from purchasing one or more units of a product will be less with each one purchased

Ex: $ 15.00 for a CD, if you have money for one you will buy a least one. Buying additional CD’s depends on the satisfaction you expect from buying other CD’s. You will have high satisfaction from owning more CD’s.

Rule stating that individuals cannot keep buying the same quantity of a product if its price rises and their income stays the same

Ex: Groceries, Gasoline Also works in reverse If price decreases and income remains the same,

purchasing power is increased, consumer will likely buy more of the product

The economic principle stating that if two items satisfy the same need and the price of one rises, people will buy the other

Ex: CD’s and iTunes Albums

What is a demand curve? A line plotted on a graph showing the quantity

demanded of a good or service at each possible price

Draw example from board on your notes Pay special attention to where price and quantity

are located on the graph

What is a supply curve? A line plotted on a graph that shows the

quantities supplied of a good or service at each possible price

Draw example from the board on your notes Pay special attention to where the price and

quantity are located on the graph

Shortage- Quantity demanded is greater than the quantity supplied

Examples- Wii and Xbox were introduced

Surplus- When supply is greater than demand

Examples- As seen on TV products

Price of a product or service at which the amount producers are willing to supply is equal to the amount consumers are willing to buy

On a graph it is where the supply and demand curves intersect

Copy down graph from the board. Pay attention to where price and quantity are located. Circle where the two intersect

Complimentary goods- raw goods that are related in an inverse fashion to other goods

Examples- Gas/Oil, Peanut Butter/Jelly

Substitute goods- Goods that are in competition.

Examples- Butter/Margarine

Both types of goods are in a direct relationship.