Watch the video entitled 

 then answer the following questions:

Text :

How much are you willing to pay to get your hands on that new video game system? What would you do if the prices at your favorite pizza shop increased? Every day people ask questions like these relating to the concepts of supply and demand.

 Demand is the desire consumers have for a good or service. The more people who want a good or service, the higher the demand for it. Supply is the total amount of a good or service available for consumption.

 The higher the amount of a good or service produced and made available to consumers, the larger the supply of it will be. Supply and demand have a big impact on the prices of products and services. Consider what happens with bananas.

 Now there are few bananas on the shelves, but many people are waiting to purchase them. The demand for bananas is higher than the supply of bananas because there are more people wanting them than there are bananas available at the market.

 Knowing this, the banana producer may increase the price of the bananas because they know that with the higher demand many consumers are willing to pay more to get what they want. Some consumers will decide to leave without purchasing bananas because they aren't willing to pay the higher price.

 What would happen if we added another producer to the situation so that there are two banana sellers? The demand for bananas would be lower than the supply because there would be more bananas available than consumers want.

 The banana producers may decrease the price of the bananas to entice more consumers to buy their product. Thus increasing the demand for bananas. Understanding supply and demand is key to understanding our own purchasing behavior as well as the way business works.

Questions :

  1. What is the definition of demand as explained in the text?
  2. How does the text describe the relationship between the number of people wanting a good or service and its demand?
  3. Define supply according to the text. How is it related to the availability of a good or service?
  4. Explain the impact of a higher production of a good or service on its supply.
  5. Using the example of bananas, how does the text illustrate a situation where demand exceeds supply?
  6. In the banana example, why might a producer increase the price of bananas when demand is high?
  7. How does the addition of another banana producer affect the balance between supply and demand in the market?
  8. If the supply of bananas exceeds the demand, what strategy might producers use to encourage consumers to buy their product?
  9. How does understanding the principles of supply and demand relate to consumer behavior?
  10. Why is it important for businesses to grasp the concepts of supply and demand in their operations?

English For Economic Purposes