Supply and Demand

As you consume more of a good, the total satisfaction you obtain tends to rise

As you consume more of a good, the total satisfaction you obtain tends to fall

As you produce more of a good, the average utility gained decreases

Price is measured on the vertical axis

Quantity is measured on the horizontal axis

It's slope is negative

It has an upward slope

as price increases, supply increases

as price increases, demand decreases

as prices decrease, supply increases

as price decreases, supply decreases

A

B

C

D

producers, consumers

quantities, prices

consumers, producers

prices, quantities

they have positive slopes

they show quantity supplied at different price levels

as prices increase, quantities increase

they have an upward slope

they have a negative slope

at higher prices, consumers demand less

as price increases, suppliers earn higher profits

as price increases, so do costs