Lesson 16 — Activity 2: Supply and Demand

Have you ever gone online to make a music purchase? You will notice the different types of music available. Have you noticed that the majority of music available will be rock, rap, and pop? There is usually very little music that is classical or from an opera. Why is this???

In this activity, you will learn about supply and demand.

There is more rock, rap, and pop music available because there are more people who want these types of music than there are people who want classical music. The digital music stores are supplying what most people are demanding.

Supply is how much of something is available. We can talk about the supply of goods, services, or money.

Demand is how much of something people want. Again there is demand for goods, services, and money.

Think about these examples:

During the summer in Alberta, there is a smaller supply of snow shovels because people don't need them or demand them. Yet in the winter, the supply and demand for snow shovels is much greater.

Source: Flickr.com CC BY 2.0

During the winter in Alberta, there is a large demand for natural gas to heat people's homes. Yet in the summer, the supply and demand for natural gas is not as great.

In a family, the supply of money must be enough to meet the demand of their needs. This means members of the family must make enough money to buy things they need, like food, shelter, and clothing.

As the family supply of money increases (gets bigger), family members are able to meet the demand for wants. Wants are things like holidays, game systems, stereos, and recreational vehicles.

As the family supply of money decreases (gets smaller) for some reason, such as when one family member loses a job, members of the family often have to cut back on these wants because they must meet their needs.

In order to have a good supply of any item or service, there must be enough resources. Resources are either the items used to make goods or the people who perform services.

Sometimes certain resources can run short. For example, many of the oranges we get in Alberta come from Florida. When Florida gets very cold weather, the oranges don't grow properly. This means there are less oranges to send to Canada. When we run short of a resource, it is called scarcity. Here are some examples:

Source: Images from Pixabay.com

Source: Images from Pixabay.com

You have probably noticed that when there is scarcity, prices tend to go up. For example, when very few apartments are available to rent in a community, the cost of renting goes up. However, when there are lots of apartments available, the prices tend to go down.

Digging Deeper!