Supply and demand social studies lesson for kids

Supply and demand social studies lesson for kids -  social studies skills studied in 2nd, 3rd, 4th, 5th grades.

Supply and demand is a term used in economics to describe the relationship between how much of a product people want and how much of that product is available. This is an extremely important thing to understand, since it determines the price of a particular product. Because it determines prices, understanding supply and demand is a foundation stone of economics.

Supply and demand game quiz for students

In the term ‘supply and demand’, demand refers to the amount of a particular product that people want. Supply, meanwhile, refers to how much of that particular product is available to sell. For example, if you work at a grocery store that sells, on average, ten pumpkins every day, the demand for pumpkins is ten. Ten people come into the store on a typical day wanting to buy a pumpkin. If you have ten pumpkins in your store every day, ready to be sold, your supply and demand for pumpkins are equal. Continue reading below>>>

Now let’s say that Thanksgiving rolls around. Everybody is coming into the grocery store, wanting to buy a pumpkin to make some pumpkin pie. Suddenly, your demand has gone up. Now, instead of ten people wanting to buy a pumpkin every day, fifty people want to buy a pumpkin every day! Suddenly, your demand exceeds your supply — you still only have ten pumpkins sitting in your store. Because of this, the price of each pumpkin is going to increase, because more people want it and are willing to pay higher prices for it.
On the other hand, the law of demand works a different way. It states that if a particular product has a higher price, the demand will become lower. This is because most people are not willing to pay a higher price for a product. Let’s say, for example, that a man comes into a store every day to buy a bottle of lemonade, which costs a dollar. He demands a bottle of lemonade every day. However, suddenly, the price of lemonade has risen to three dollars. The man was willing to buy a lemonade every day for a dollar, but three dollars is much too expensive for him. He decides he’ll drink a bottle of water instead. Because the price increased, the demand decreased.

The law of supply works the opposite way. This law states that if a particular product is a higher price, the supply will also be higher. This is because the people who make the product know that it is a high price and want to sell as much of it as possible. They hope that by producing a large amount of that particular product, customers will respond to the high supply by increasing their demand, thereby spending more money on the product being sold.

Sometimes, supply and demand are the same. This is called equilibrium. The amount of the good being made is the same as the amount being bought and used. This is a perfect situation, since it makes everyone happy — people have as much of the product as they want, and sellers are making the amount of money they want to make.