This presentation contains the meaning of Demand and Supply, its factors, types and laws.

1. Demand and Supply
o Nangy Sacoso .Louila Duyag
o Mary June Estores .Noel Parohinog
o Joy Ann Marande .Johnrie Capunong

2. What is Demand?
♦ schedule of various quantities of
commodities which buyers (consumers) are
willing and able to purchase at a given price,
time and place.
♦ is simply a statement of a buyer’s plans, or
intentions, with respect to the purchase of a
product.

3. What are the factors of demand?
♦ Income – people buy goods and services
when their incomes increase.
♦ Population – more people means more
demand of good and services.
♦ Tastes and Preferences – demand for good
and services increases when people like or
prefer them.

4. What are the factors of demand?
♦ Price Expectation – speculation of basic
commodities
♦ Prices of Related Goods – when the price of a
certain product increases, people tend to buy a
substitute product (competitor)
♦ Number of Buyers - an increase in the number of
buyers in a market is likely to increase product
demand, a decrease in the number of buyers will
probably decrease demand.

5. What are the factors of demand?
♦ Complements
– Complementary goods are used together, they
are typically demanded jointly.
♦ Substitutes
– When two products are substitutes, an increase
of the price of one will decrease the demand of
the other.

6. Table 3.1
♦ reveals the relationship between the various
prices of corn and the quantity of corn a
particular consumer would be willing to
purchase at each of these prices.

7. What is the validity of the Law of
Demand?
♦ The law of demand states:
– As price increases, quantity demand decreases
and as price decreases, quantity demand
increases.

8. What is the Law of Supply and
Demand?
♦ Law of Supply
– As price rises, the quantity supplied rises; as
price falls, the quantity supplied falls.
WHILE….
♦ Law of Demand
– As price falls, the quantity demanded rises, and
as price rises, the quantity demanded falls.

9. What is Supply?
♦ Schedule of various quantities of
commodities which producers are willing and
able to produce and offer at a given price,
place and time.

10. What are the factors of Supply?
♦ Resource Prices
♦ Technology
♦ Taxes and subsidies
♦ Prices of Other Goods
♦ Producers Expectations
♦ Number of Sellers

11. What are the factors of Supply?
♦ Resource Prices
– the prices of the resources used in the
production process.
Example:
1. An increase in the prices of sand, crushed
rock and Portland cement will increase the cost
of producing concrete and reduce its supply.
2. A decrease in the price of flat-panel glass
increase the supply of big-screen television

12. What are the factors of Supply?
♦ Technology
– Improvements in technology (techniques of production) enable
firms to produce units of output with fewer resources.
– Resources are costly, using fewer of them lowers production costs
and increases supply.
Example:
1. Technological advances in producing flat panel computer
monitors have greatly reduced their cost. Manufacturers will now
offer more such monitors than previously at the various prices; the
supply of flat-panel monitors has increased.

13. What are the factors of Supply?
♦ Taxes and subsidies
– An increase in sales or property taxes will
increase production costs and reduce supply.
– If the government subsidizes the production of
a good, it in effect lowers the producers’ costs
and increases supply.

14. What are the factors of Supply?
♦ Prices of Other Goods
– Firms that produce a particular product , like soccer
balls, can sometimes use their equipment to produce
alternative goods, like basketballs and volleyballs. The
higher prices of these “other goods” may entice soccer
ball producers to switch production to those other
goods.
Example:
1. When the prices of basketballs and volleyballs
decline, producers of those goods may decide to
produce more soccer balls instead, increasing their

15. What are the factors of Supply?
♦ Producers Expectations
– Changes in expectations about the future price
of a product may affect the producer’s current
willingness to supply that product.
Example:

16. What are the factors of Supply?
♦ Number of Sellers
– The larger the number of suppliers, the greater
the market supply.

17. What is the validity of the Law of
Supply?
♦ As price increases, quantity supply also
increases and as price decreases, quantity
supply also decreases.

18. Thank You 