FinishHigh · 1-page summary
Supply, demand and price
Supply, demand and price
Key points
- Demand: how much people want to buy. Lower price, more buying.
- Supply: how much sellers will sell. Higher price, more selling.
- Equilibrium price: where the supply and demand lines cross.
- Less supply or more demand pushes prices up.
- More supply or less demand pushes prices down.
Worked example
A freeze ruins half the orange crop.
Supply goes down. People still want juice.
So the price of orange juice goes up.
Try it
A factory finds a cheaper way to make bikes. What happens to supply and to the price?
Answer: Supply goes up, so the price usually goes down.
Watch the video at finishhigh.com/videos. Independent practice for the GED® test. No pass guarantee.