Let's Break It Down
Supply and Demand

1.  Demand is the quantities that people are willing and able to buy at various prices.   

• Law of Demand: There is an inverse relationship between price and quantity demanded
• Ex. If price goes up, quantity goes down. If price goes down, quantity goes up.

     
 2.  Supply is the quantities that producers or suppliers are willing and able to produce or sell at various prices

• Law of Supply: There is a direct relationship between price and quantity supply
• Ex. If price goes up, quantity goes up. If price goes down, quantity goes down. 

What causes a change in quantity demanded? Supplied?
Δ in price

ΔD                                                                          ΔS
-Δ in # of buyers (Population)                    -Δ in technology
-Δ in buyers' taste (Advertising)                -Δ in weather
-Δ in the price of related goods                  -Δ in resources/factor prices
      *Substitute goods                                       -Δ in taxes/subsidies
      *Complementary goods                           -Δ in expectations
-Δ in income                                                         
-Δ in expectation


*Note: If Supply/Demand goes down, the graph will shift left. If Supply/Demand goes up, the graph will shift right.