SUPPLY OR DEMAND?
People buy more ice cream when it’s hot outside.
Demand
Income increases for most consumers buying normal goods.
Demand shifts RIGHT
The price of pizza falls, so more people buy pizza.
Movement
When price goes up, quantity demanded generally goes…?
Down
When price rises, quantity supplied generally…?
Increases
A new factory allows companies to produce more cars.
A new factory allows companies to produce more cars.
Supply
A new tax increases production costs.
Supply shifts LEFT
A new diet trend increases demand for salads.
Shift
What concept explains why people buy less at higher prices?
Willingness to pay
Why do firms produce more at higher prices?
Higher prices cover higher costs
The price of coffee rises, so coffee shops sell more coffee.
Supply
A cheaper substitute becomes available.
Demand shifts LEFT
The price of gas rises, so gas stations sell more gas.
Movement
Why don’t people just keep buying the same amount when prices rise?
Tradeoffs increase / opportunity cost increases
What concept explains increasing cost as output rises?
Opportunity cost
A viral trend makes a product more popular among teenagers.
Demand
Technology improves production efficiency.
Supply shifts RIGHT
A hurricane destroys crops, reducing how much can be sold at every price.
Shift
If nothing else changes, what happens when price decreases?
Quantity demanded increases (movement)
Why don’t firms produce maximum output at low prices?
It’s not profitable / costs exceed benefits
Workers' wages increase, making production more expensive.
Supply
Consumers expect prices to rise in the future, so they buy more now.
Demand shifts RIGHT
TRUE OR FALSE: Demand increased because prices fell.
FALSE. A movement, not a shift
YES OR NO: Does a higher price make people like a product less?
No. It changes choices, not preferences
YES OR NO: Does a higher price make producers “greedier” every time?
No. It might make higher-cost production worthwhile.