Supply and Demand Flashcards
Supply and Demand in Italy
Started in Italy because they mastered Supply and Demand; Italians went to the Holy Land and bought cinnamon, which was common in HL but scarce in Europe. This means that they could sell double or even triple the amount that they bought for the cinnamon.
Supply
The amount of a good or service; Sellers are willing and able to sell (at various prices)
Law of Supply
As the price of an item goes up, the number of a good that’s available to be sold increase
Demand
The amount of a good or service; Buyers are willing and able to buy (at various prices)
Law of demand
The cheaper something is, the more buyers can buy it
As prices increase…
As prices increase, so do the supplies. (sellers are willing to sell more if the price is high)
As prices decrease…
As prices decrease, so do the supplies. (buyers are willing to buy more if the price is low but there isn’t enough supplies)
Point of intersection
Point of Intersection = Sellers are willing to sell at that price and buyers are willing to buy at that price
When the price of a product is set too low…
there will be more buyers willing to buy but less products that can be sold / sellers that are willing to sell it
When the price of a product is set too high…
there will be more sellers willing to sell + more products but less buyers that are willing to buy it
