4. WHAT IS DEMAND ? :
DEMAND IS THE DESIRE TO OWN ANYTHING,
THE ABILITY TO PAY FOR IT, AND
THE WILLINGNESS TO PAY DURING A SPECIFIC
PERIOD
5. Law of demand
THE LAW OF DEMAND STATES THAT OTHER FACTORS
BEING CONSTANT, PRICE AND QUANTITY OF DEMAND
OF ANY GOOD AND SERVICE ARE INVERSELY RELATED
TO EACH OTHER.
WHEN THE PRICE OF THE PRODUCT INCREASES, THE
DEMAND FOR THE SAME PRODUCT WILL FALL.
6. DEMAND CURVE:
GRAPHICALLY SHOWS THE RELATIONSHIPS
BETWEEN THE PRICE OF A GOOD AND THE QUANTITY
WITH ALL DEMANDED, HOLDING CONSTANT ALL
OTHER VARIABLES THAT INFLUENCES DEMAND.
0
0.5
1
1.5
2
2.5
3
0 0.5 1 1.5 2 2.5 3
Y-Values
7. Movement and Shifting demand curve
Changes occur for two main reasons, namely changes in the price
of the goods concerned and the other one is due to ceteris paribus
factors (factors other than the price of the goods themselves)
usually the buyer's income or market taste.
the only thing that makes the demand curve move is the price of
the item or the price of the item itself.
9. What is Supply?
Supply is the quantity of goods a firm offers to sell in
the market at a given price. Now
the theory of supply states that with an increase in
price the number of goods a firm wishes to supply will
also increase.
10. Law of Supply
Direct relationship between the price and quantity
supplied
Increased price causes increased quantity supplied
Decreased price causes decreased quantity supplied
Related to cost-plus pricing model, i.e. as quantity
increases costs often increase so firm need a higher P
to increase Q.
11. SUPPLY CURVE
THE GRAPHYCAL REPRESENTATION OF THE RELATION BETWEEN
THE QUANTITIES SUPPLY OF A GOOD THAT PRODUCERS ARE
WILLING AND ABLE TO SELL AND THE PRICE OF THE GOOD
GRAPH CURVE THAT NORMALLY SLOPES UPWARD TO THE RIGHT
OF THE CHART, SHOWING THE QUANTITY OF THE PRODUCT
SUPPLIED AT DIFFERENT PRICE LEVELS