Supply and Demand
Macroeconomics Chapter 3
Demand: A schedule or a curve that shows the various amounts of a product that consumers are
willing and able to purchase at each of a series of possible prices during a specified period of time.
Law of Demand: As price falls, quantity demanded increases; as price rises, quantity demanded
decreases. Negative or inverse relationship between price and quantity.
Change in Demand: Change in demand schedule or shift in demand curve as a result of the impact of a
change in one or more of the determinants of demand.
Change in Quantity Demanded: Movement from one point to another point on a fixed demand
schedule or demand curve.
Determinants of Demand:
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Tastes or preferences
Number of buyers
Income
 Superior (Normal) goods
 Inferior goods
Prices of related goods
 Substitutes
 Complements
Unrelated goods
Consumer expectations
Supply: A schedule or a curve showing the various amounts of a product that producers are willing and
able to make available for sale at each of a series of possible prices during a specified period of time.
Law of Supply: As price rises, the quantity of product made available by producers increases; when
price falls, the quantity of product made available by producers decreases.
Change in Supply: Change in a supply schedule or shift in a supply curve as a result of a change in one or
more of the determinants of supply.
Change in Quantity Supplied: Movement from one point to another on a fixed supply curve as a result
of a change in the price of the specific product being considered.
Determinants of Supply:
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Resource prices
Technology
Taxes and subsidies
- Prices of other goods
- Producer expectations
- Number of sellers