Supply & Demand Lesson for Kids: Definition & Examples

Instructor: Jennifer Lowery

Jennifer has taught elementary levels K-3 and has master's degrees in elementary education and curriculum/instruction and educational leadership.

Have you ever wondered how your favorite store knows what products to sell and what prices to set? In this lesson, learn the definitions of supply and demand and how they work together in an economy.

Let's go Shopping!

Have you ever saved up your money to buy something special at your favorite store? You were probably focused on enjoying your purchase, but have you ever thought about how buying and selling works? Or how stores know how many items to stock or what prices to charge? Buying and selling are the key ingredients in our economy, which is the system in which people earn and spend money. Let's learn more about how our economy works!

What is Supply?

The next time you go to the grocery store, take a look around at the shelves. Check out how many gallons of milk are in the refrigerated case, or how many bags of candy are on the shelves in the sweets aisle. This is the supply of the store, or how much of each item the store has to sell.

This grocery store has a large supply of bananas to sell.
grocery store

What is Demand?

So how do stores know how much of a supply to have for shoppers? This is where demand comes in. Demand is a person's desire for a product or service. When people want a certain item, this creates a demand for stores to make sure it's available. Stores make sure to keep a large supply of products that they know shoppers will buy.

When people want to buy something, they create a demand for a product or service.

There are different factors that affect demand. One important influence is the time of year. Think about it, would you really want to go buy a heavy winter coat in the middle of the hot summer? Or would you need to buy Halloween candy in the middle of April? The seasons have a big impact on demand.

If an item is very popular, this makes the demand go up. Have you seen people waiting in lines around the block for the newest phone or tablet? These items are very popular and, therefore, are in high demand.

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