Changes

The demand for a good is also described in terms of price and quantity.  At a given price, there is a specific quantity demanded by the public for the good.  A billion people might buy a car if the price were only $1 (unrealistic).  At a much higher price of $30,000, the demand drops to a quantity of only millions sold (realistic).  At a still higher price of more than $100,000, the demand falls much further to the range of only a few thousand that can be sold (these are the very luxurious cars, like the Lamborghini sports car shown at the right).

The demand for a good is also described in terms of price and quantity.  At a given price, there is a specific quantity demanded by the public for the good.  A billion people might buy a car if the price were only $1 (unrealistic).  At a much higher price of $30,000, the demand drops to a quantity of only millions sold (realistic).  At a still higher price of more than $100,000, the demand falls much further to the range of only a few thousand that can be sold (these are the very luxurious cars, like the Lamborghini sports car shown at the right).

Because supply and demand can both be expressed in terms of price and quantity, they can be plotted on the same graph.  '''''The y-axis is typically price, and the x-axis is usually quantity'''''.  Just memorize this rule and stick with it:  price is on the y-axis, and quantity is on the x-axis.<ref>You might think it would be more natural to place the price on the x-axis and the quantity on the y-axis, since the price is more of the "cause" and quantity is more of the "effect", particularly for the buyer.  But economists often do things slightly backwards!  P is always on the y-axis and quantity on the x-axis, and just memorize that.</ref>  This might help you remember:  "p" for price is lower in the alphabet than "q" for quantity, and "p" appears first on the graph as one reads from left to right.  Put another way, the graph is of "Ps and Qs," in that order from left to right (P on the y-axis to the left, and Q on the x-axis to the right).

Because supply and demand can both be expressed in terms of price and quantity, they can be plotted on the same graph.  '''''The y-axis is typically price, and the x-axis is usually quantity'''''.  Just memorize this rule and stick with it:  price is on the y-axis, and quantity is on the x-axis.<ref>You might think it would be more natural to place the price on the x-axis and the quantity on the y-axis, since the price is more of the "cause" and quantity is more of the "effect", particularly for the buyer.  But economists often do things slightly backwards!  P (for price) is always on the y-axis and Q (for quantity) is always on the x-axis, so it is best to just memorize that.  Think of it as being in alphabetical order:  P is to the left of Q when viewing a graph.</ref>  This might help you remember:  "p" for price is lower in the alphabet than "q" for quantity, and "p" appears first on the graph as one reads from left to right.  Put another way, the graph is of "Ps and Qs," in that order from left to right (P on the y-axis to the left, and Q on the x-axis to the right).

The supply curve is always '''''upward sloping''''': '''the higher the sales price, the higher the quantity that companies will produce for sale'''.  That is because higher sales prices bring in greater revenue -- and greater profits -- to provide the incentive to increase the supply quantity.

The supply curve is always '''''upward sloping''''': '''the higher the sales price, the higher the quantity that companies will produce for sale'''.  That is because higher sales prices bring in greater revenue -- and greater profits -- to provide the incentive to increase the supply quantity.