Supply and demand models are models of how a competitive market actually works.

The 5 key elements to this model are:

• the DEMAND curve
• the SUPPLY curve
• factors that determine the shifting of either or both curves
• the EQUILIBRIUM price
• changing of the equilibrium price

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California Content Standard 12.2

Students analyze the elements of America's market economy in a global setting.

1. Understand the relationship of the concept of incentives to the law of supply and the relationship of the concept of incentives and substitutes to the law of demand.
2. Discuss the effects of changes in supply and/ or demand on the relative scarcity, price, and quantity of particular products.
3. Explain how prices reflect the relative scarcity of goods and services and perform the allocative function in a market economy.

basics | supply | demand | equilibrium | shortage | surplus | graphs