Supply and Demand Chapter Notes | Social Studies for Grade 3 PDF Download

Introduction

Understand Quantity Supplied and Quantity Demanded

• Quantity Supplied:
  • How much of a product, like apples or toys, a seller is ready to make and sell.
  • Depends on the price of the product.
  • Higher prices encourage sellers to make more because they earn more money.
    • Example: If ice cream costs $5 a cone, a shop might make 100 cones.
  • Lower prices mean sellers make less because they earn less money.
    • Example: If ice cream costs $1 a cone, the shop might make only 20 cones.
• Quantity Demanded:
  • How much of a product people want to buy.
  • Depends on the price of the product.
  • Lower prices mean more people want to buy it.
    • Example: If a toy costs $2, many kids might want to buy it.
  • Higher prices mean fewer people want to buy it.
    • Example: If a toy costs $20, fewer kids might want it because it’s expensive.
• Key Points:
  • Quantity supplied comes from sellers, and quantity demanded comes from buyers.
  • Both are affected by the price of the product.

Understand Overall Supply and Demand

• Supply:
  • The total amount of a product that all sellers are willing to make and sell at different prices.
  • Example: All toy stores in a town decide how many dolls they can sell.
• Demand:
  • The total amount of a product that all buyers want to buy at different prices.
  • Example: All kids in a town decide how many dolls they want to buy.
• How They Work Together:
  • Supply and demand decide the price of things.
  • If many people want a product but there’s not much of it, the price goes up.
    • Example: A popular new video game with few copies might cost more.
  • If there’s a lot of a product but not many people want it, the price goes down.
    • Example: A store with too many old toys might lower the price to sell them.
  • Supply and demand help stores decide how much to make and what price to charge.

Create and Use Supply and Demand Curves

• Supply Curve:
  • A line on a graph showing how much of a product sellers will make at different prices.
  • Goes up from left to right because higher prices mean sellers make more.
  • Example: If a cookie costs $1, a bakery might make 50 cookies, but if it costs $3, they might make 150 cookies.
• Demand Curve:
  • A line on a graph showing how much of a product people want to buy at different prices.
  • Goes down from left to right because lower prices mean more people want to buy.
  • Example: If a book costs $5, 100 kids might want it, but if it costs $15, only 20 kids might want it.
• Equilibrium:
  • The point where the supply and demand curves cross on the graph.
  • Shows the price where the amount sellers want to sell equals the amount buyers want to buy.
    • Example: If the curves for lemonade cross at $2 and 100 cups, 100 cups will be sold at $2 each.
  • Supply and demand curves help us see how prices are decided in a market.

Identify Shortage and Surplus

• Shortage:
  • Happens when there is not enough of a product for everyone who wants to buy it.
    • Example: If a store has only 10 teddy bears, but 20 kids want them, there’s a shortage.
  • During a shortage, the price might go up because many people want the product.
• Surplus:
  • Happens when there is too much of a product and not enough people want to buy it.
    • Example: If a store has 100 balloons, but only 30 kids want them, there’s a surplus.
  • During a surplus, the price might go down to sell more.
• Key Points:
  • Shortages and surpluses show when supply and demand are not balanced.
  • When there’s a shortage, sellers might make more of the product.
  • When there’s a surplus, sellers might make less or lower the price.
  • Understanding shortages and surpluses helps stores know how much to make or sell.

Identify Shortage and Surplus with Graphs

• Shortage on Graphs:
  • Happens when the price is below the equilibrium point on a supply and demand graph.
  • At a lower price, more people want to buy, but sellers don’t make as much, so there’s not enough.
    • Example: If the equilibrium price for a hat is $10, but the store sells it for $5, more kids will want it, causing a shortage.
  • Shown when the quantity demanded is more than the quantity supplied.
• Surplus on Graphs:
  • Happens when the price is above the equilibrium point on a supply and demand graph.
  • At a higher price, sellers want to make more, but fewer people want to buy, so there’s too much.
    • Example: If the equilibrium price for a hat is $10, but the store charges $15, fewer kids will buy it, causing a surplus.
  • Shown when the quantity supplied is more than the quantity demanded.
• Using Graphs:
  • Graphs help us see shortages and surpluses by comparing the supply and demand curves.
  • The equilibrium point shows where there is no shortage or surplus.

Identify Shortage and Surplus with Data

• Understanding Data:
  • Data is information, like numbers, that tells us how much of a product is supplied or demanded.
• Shortage with Data:
  • Example: A store has data showing they have 50 pencils to sell at $1 each, but 80 kids want to buy them.
  • This shows a shortage because the quantity demanded (80) is more than the quantity supplied (50).
• Surplus with Data:
  • Example: A store has 200 apples to sell at $2 each, but only 100 kids want to buy them.
  • This shows a surplus because the quantity supplied (200) is more than the quantity demanded (100).
• Using Data:
  • Compare the number of products available (supplied) to the number of products wanted (demanded).
  • If quantity demanded is higher than quantity supplied, there is a shortage.
  • If quantity supplied is higher than quantity demanded, there is a surplus.
  • Data helps stores decide if they need to make more or less of a product.
  • Data also helps stores decide if they should change the price to fix a shortage or surplus.