Related about economics. Do we always buy more when price decreases? P.E.D. n P.E.S. on equillibrium.?

2. Instructor:
Prepared By:
 Khalid Sardar (L5MF14MCOM0003 )
 Syed Mudassir Shah (L5MF14MCOM0017 )
 Tayyab Hussain (L5MF14MCOM0009)

3. Do we always buy more when prices decreases?
Explain the effect of Tax on market price and quantity
demand and Supply?
Calculate P.E.D. & P.E.S. when there is Market
Equilibrium ?

4. Do we always buy more
when price decreases?
Title

5. Context
a) Definition
b) Factors
c) Explanation
d) Table
e) Graph
f) Conclusion

6. Definition
The Quantity of a commodity that
consumer are willing and able to
purchase over a given period of time at
each price of commodity is called
demand

7. Factors
There Are Some Factors Which Increase or Decrease the demand.
a)Price
b)income
c) Availability Of Resources
d)Climatic Condition
e) Government Policy
i) Tax
ii) Subsidies

8. Serial No. Price Per
HamBurger
Demand per Day
1 2 2
2 1.5 4
3 1 6
4 0.75 7
5 0.5 8
Table

9. The table shows that at the price of 2 per H.B The Quantity demanded is 2. At
the lower price 1.5 the quantity demanded is 4. at the price of 1 the quantity
demanded is 6 and the price of 0.75 and 0.5 the quantity demanded is 7 and 8
respectively.
At lower price, greater quantities of H.B are demanded. Each additional H.B
consumed per day and provide Extra Benefit. So consumer would only purchase
greater quantities at lower price.
This is particular always true for all commodities, Lower
Price will also brings more Consumer into the market.
Quotation

10. P
D0 2 4 6 7 8
2
1.5
1
0.75
0.5
B
C
D
E
F

11. Explain the effect of Tax on market price
and quantity demand and Supply?
Topic

12. Content
 Effect of Tax on Market Price
 Effect of Tax on Quantity Demanded
 Effect of Tax on Supply
 Tax
Conclusion

13. What is Tax?
A charge placed on the production of a good
and service by the Government. For
example petrol is taxed heavily by the
Government

14. Demand
Quantity demanded is the quantity of a
commodity that people are willing to buy
at a particular price at a particular point
of time.

15. Effect of Tax on Quantity Demand
The increase in tax will lead a decrease in demand while
supply remain constant. Because when Tax impose on
product the price of that product increases. So as price
increases the Demand of product decreases.

16. Price
Quantity
P
1
Q1
Demand without Tax

17. Price
Quantity
P
1
Q
2
Demand with Tax
Demand curve shifts
down because the
tax .
From D1 to D2.
D2
D1
Demand will increase
if the tax decreases.
From D2 to D1.
P
2
Q
1

18. Effect of Tax on Price
When Demand Curve Shifts
An increase in demand while holding supply
constant will cause a price increase.
A decrease in demand while holding supply
constant will cause a price decrease

19. Supply
supply refers to the amount of a product
that producers and firms are willing to
sell at a given price when all other factors
being held constant.

20. Effect of Tax on Supply
The increase in tax will lead a decrease in supply. Because when Tax impose
on product the price of that product increases. So as price increases the
supply of product decreases.

21. Supply without Tax
Price
Quantity
P1
Q1
S1
D

22. S2
P
2
Q2
A specific leads
inward shift in
Supply curve
If Tax withdraw
from a Product
than supply curve
shift downward.
Supply with Tax

23. Effect of Tax on Price
When Supply Curve Shifts
An increase in supply while holding demand constant
will cause a price decrease.
A decrease in supply while holding demand constant
will cause a price increase.

24. Market Price
Market price is the price of an
product as determined by supply
and demand.
Market Price
Graphically Shown As
Where Demand=Supply

25. Conclusion
From above it is conclude that any type of Tax plays a vital role
in the Demand and supply of any Product. For Successful
business its very important that their should be minimum tax
on any product by Tax authorities.

26. CALCULATE P.E.D & P.E.S
WHEN THERE IS MARKET
EQUILIBRIUM
a) Definition
b)Derivative
Title

27. Definition
Market equilibrium is a market
state where the supply in the
market is equal to the demand in
the market.
OR
Equilibrium is That Point Where Demand &
Supply Curve Intersect Each other.

29. How To Drive Price
Elasticity Demand & Price
Elasticity Supply At
Equilibrium Point.
Lets Take An Example

30. Condition For Equilibrium
Qd = Qs
If Qd is Equal To
p = .04q +8 … (i)
If Qs is Equal To
P = 17 - .02q …(ii)
By Putting the Values Of Qd & Qs We get
.04q+8 = 17 - .02q
By Arranging It
.04 + .02 = 17 – 8
.06q = 9
Q = 9/ .06
Q = 150
Example

31. By Putting The Value of Q in Equation (i)
P= .04q + 8
P=.04 (150) + 8
P= 6+8
P= 14
By Putting Value Of Q in Equation (ii)
P= 17 - .02q
P= 17 – 0.2 (150)
P= 17 – 3
P= 14

32. Value Of Price Is Same In Both Demand And Supply Equation. Its mean Value
of Price is not change in unless Some Factor Effect the market Equilibrium.
If Qd > Qs
Then there is shortage in Market
If Qs > Qd
Then There Is Surplus In Market
Conditions