The higher the price, the fewer people want a scarf.
The big ideaA price settles where the number wanted meets the number offered.
How it works
Demand is how many people want a thing at a price. Supply is how many are made at that price.
A higher price makes fewer people want one, and more scarves get made.
A shortage is more wanted than made. A surplus is more made than wanted. Where the two numbers match is the market price.
Nobody decides it. Juno raises her tag when buyers queue and lowers it when scarves pile up.
More scarves are made as the price rises.Shortage and surplus.
Example 1: Spot the match
At 4 coins, 8 people want one and 4 are made.
At 6 coins, 6 people want one and 6 are made.
At 8 coins, 4 people want one and 8 are made.
Only at 6 coins are the two numbers equal, so 6 coins is the market price.
Example 2: A shortage
At 4 coins, 8 people want one and 4 are made.
8 − 4 = 4 people go without.
More want one than are made, so it is a shortage and the price goes up.
Example 3: A surplus
At 8 coins, 4 people want one and 8 are made.
8 − 4 = 4 scarves sit unsold.
More are made than wanted, so it is a surplus and the price goes down.
Example 4: The cold snap
After a cold snap, 4 more people want a scarf at every price.
At 6 coins, 6 + 4 = 10 people want one, but only 6 are made.
10 − 6 = 4 people go without, so the price rises.
At 8 coins, 4 + 4 = 8 people want one and 8 are made, so the new market price is 8 coins.
Words to know
demand
How many people want a thing at a price.
supply
How many are made at a price.
shortage
More people want one than are made.
surplus
More are made than people want.
market price
The price where wanting and making are equal.
Watch out
A higher price makes fewer people want one, not more.
A surplus pushes a price down, not up.
At the market price, the scarves made are the scarves wanted.
No one person sets the price. Wanting and making find it together.
Try it
At 10 coins, 2 people want a scarf and 10 are made. Is it a shortage, a surplus or a match?
At 2 coins, 10 people want one and 2 are made. How many go without?
After the cold snap, how many people want a scarf at 8 coins?
Answers: 1. A surplus · 2. 8 · 3. 8
Try at homeAsk a grown-up about a price they saw change at a shop or a fair, and what they think pushed it.
For grown-upsReal markets have many goods and many sellers, but the push and pull are the same. Look together at a price that changed at a shop or a fair and ask what might have pushed it.
Open these notes on screenScan the code, or go to tutorpip.com.