Recommended
More Related Content
Similar to Financial pitch deck.pptx
Similar to Financial pitch deck.pptx (20)
Recently uploaded
Recently uploaded (20)
Financial pitch deck.pptx
- 1. Demand, Supply, and the Market Process By Jigyasa Kaur
- 3. LAW OF DEMAND QUANTITY DEMANDED DEMAND SCHEDULE DEMAND CURVE DETERMINANTS OF DEMAND Pitch deck title DEMAND
- 4. LAW OF DEMAND 4 Law of Demand: the inverse relationship between the price of a good and the quantity consumers are willing to purchase. As the price of a good rises, consumers buy less. The availability of substitutes (goods that perform similar functions) explains this negative relationship.
- 5. QUANTITY DEMANDED 5 Demand is the quantity of a good or service that consumers are willing and able to buy at given prices during a period of time. Quantity demanded is the amount of a good or service people will buy at a particular price at a particular time.
- 6. DEMAND SCHEDULE DEMAND SCHEDULE IS REFERRED TO AS A TABULAR REPRESENTATION OR A TABULAR STATEMENT THAT SHOWS VARIOUS QUANTITIES OF COMMODITIES THAT ARE DEMANDED AT DIFFERENT PRICE LEVELS AT A SPECIFIC TIME PERIOD. Price Quantity $5 10 $4 20 $3 30 $2 40 $1 50 0 1 2 3 4 5 6 10 20 30 40 50 Price Quantity Demand for Wraps
- 7. Elastic and Inelastic Demand Curves ELASTIC DEMAND A change in price leads to a relatively large change in quantity demanded. Demand will be elastic when close substitutes for the good are readily available. INELASTIC DEMAND A change in price leads to a relatively small change in quantity demanded. Demand will be inelastic when few, if any, close substitutes are available.
- 8. Q: What causes a shift in Demand? A: Non-price determinants 1) BUYER’S INCOME 2) PRICE OF SUBSTITUTES 3) MARKET SIZE 4) CONSUMER TASTES 5) CONSUMER EXPECTATIONS 6) COMPLEMENT GOODS 0 1 2 3 4 5 6 7 8 10 20 30 40 50 Price Quantity
- 9. THE LAW OF SUPPLY GRAPH SUPPLY DEMANDED SUPPLY SCHEDULE DETERMINANTS OF SUPPLY SUPPLY CURVE Pitch deck title 9
- 10. LAW OF SUPPLY 10 Law of Supply: there is a positive relationship between the price of a product and the amount of it that will be supplied. As the price of a product rises, producers will be willing to supply a larger quantity.
- 11. SUPPLY SCHEDULE SUPPLY SCHEDULE IS A TABULAR REPRESENTATION OF THE VARIOUS QUANTITIES OF COMMODITIES THAT ARE SUPPLIED BY A SUPPLIER AT DIFFERENT PRICE LEVELS OVER A PERIOD OF TIME. Price Quantity $5 50 $4 40 $3 30 $2 20 $1 10 0 1 2 3 4 5 6 10 20 30 40 50 Price Quantity Supply of Wraps
- 12. Elastic and Inelastic Supply Curves ELASTIC SUPPLY Quantity supplied is relatively sensitive to changes in price. Thus, a change in price leads to a relatively large change in quantity supplied. INELASTIC SUPPLY Quantity supplied is not very sensitive to changes in price. Thus, a change in price leads to only a relatively small change in quantity supplied.
- 13. Q: What causes a shift in Supply? A: Non-price determinants 1) NUMBER OF PRODUCTS 2) INPUT COSTS 3) LABOR PRODUCTIVITY 4) TECHNOLOGY 5) GOVERNMENT ACTION 6) # OF SELLERS 7) PRODUCER EXPECTATIONS 0 1 2 3 4 5 6 7 8 10 20 30 40 50 Price Quantity
- 14. Market Equilibrium • This table & graph indicate demand & supply conditions of the market for calculators. • Equilibrium will occur where the quantity demanded equals the quantity supplied. If the price in the market differs from the equilibrium level, market forces will guide it to equilibrium. • A price of $12 in this market will result in a quantity demanded of 450 … and a quantity supplied of 600 … resulting in an excess supply. • With an excess supply present, there will be downward pressure on price to clear the market. 7 8 9 10 11 12 13 Quantity demanded = 450 Quantity supplied = 600 Price ($) 450 500 550 600 650 D S Quantity Excess supply Price (dollars) Quantity supplied (per day) Quantity demanded (per day) 12 10 8 Condition in the market Direction of pressure on price > 600 450 550 550 500 650 Excess demand < Market Balance = Equilibriu m Upwar d Downwar d
- 15. FINANCIALS Pitch deck title 15 • Quantity demanded is less than quantity supplied Qd < Qs Surplus • Quantity demanded is equal to quantity supplied Qd = Qs Equilibrium • Quantity demanded is greater than quantity supplied Qd > Qs Shortage
- 16. SURPLUS Situation In Which The Quantity Supplied Is Greater Than The Quantity Demanded At A Given Price. Qs > Qd P Note: If There Is A Surplus, Prices Generally Fall
- 17. Quantity Price 0 500 1000 1500 2000 0 1 2 3 4 5 6 7 8 9 10 Surplus of 700 At $8 there is a surplus of 700
- 18. SHORTAGE The Situation In Which The Quantity Demanded Is Greater Than The Quantity Supplied. Qd > Qs P Note: If There Is A Shortage, Prices Generally Rise
- 19. Quantity Price 0 500 1000 1500 2000 0 1 2 3 4 5 6 7 8 9 10 A price of $3 causes a shortage of 900 units. Shortage of 900
- 20. PRICE ELASTICITY OF DEMAND • Measures The Responsiveness Of Quantity Demanded To A Change In Price • Determinants • Availability Of Close Substitutes • Necessities Versus Luxuries • Definition Of The Market (Food Vs. Ice Cream Vs. Chocolate Ice Cream) • Time Horizon
- 21. PRICE ELASTICITY AND TOTAL REVENUE • If Demand For A Good Is Elastic, Price Increases Lead To Lower Total Revenue • If Demand For A Good Is Inelastic, Price Increases Lead To Higher Total Revenue
- 22. PRICE Elasticity of Supply • Measures The Responsiveness Of Quantity Supplied To A Change In Price • Determinants • Availability Of Inputs • Time
- 24. SUMMARY Basics of Demand, Supply and Equilibrium: Demand side and supply side of the market. Factors affecting demand & supply. Elasticity of demand & supply - price, income and cross-price elasticity. Market equilibrium price
- 25. THANK YOU JIGYASA KAUR CHAWLA 25
Editor's Notes
- Economics. The student understands the interaction of supply, demand, and price. The student is expected to: (A) understand the effect of changes in price on the quantity demanded and quantity supplied; (B) identify the non-price determinants that create changes in supply and demand, which result in a new equilibrium price; and (C) interpret a supply-and-demand graph using supply-and-demand schedules. equilibriumin a market setting, an equilibrium occurs when price has adjusted until quantity supplied is equal to quantity demanded
- A market facilitates the interaction of a buyer and a seller as they complete a transaction Buyers, as a group, determine the demand --The desire, ability, and willingness to buy a product or service Sellers, as a group, determine the supply Determinants: Income Price of related goods Complements Substitutes Tastes or preferences Expectations Number of buyers Consumer Surplus: the area below the demand curve but above the actual price paid. Consumer surplus is the difference between the amount consumers are willing to pay and the amount they have to pay for a good. Lower market prices increase the amount of consumer surplus in the market Consumer surplus is the difference between what the consumer is willing to pay and what they have to pay. Buyers of the first 10 thousand pizzas are willing to pay more than $20. Hence, the area above the actual price paid (the market price) and below the demand curve represents consumer surplus. Consumer surplus represents the net gains to buyers from the purchases
- Law of Demand states that as the price of a commodity falls, the corresponding demand increases and with rise in price, the demand of the commodity decreases. Therefore, there is an inverse relationship between the price of a commodity and its demand.
- A demand schedule will show the exact number of units of goods and services that will be bought at each price. Demand schedule shows the relationship between the price of a commodity and the quantity demanded. Demand schedule can be divided into two types: 1. Individual Demand Schedule 2. Market Demand Schedule
- When the market price for gasoline increases from $2 to $4 a gallon, the quantity demanded in the market falls relatively little from 10 to 8 million units per week. In contrast, when the market price for tacos rises from $2 to $4, the quantity demanded in the market falls sharply from 10 to 4 million units per week. Because the quantity demanded for tacos is highly sensitive to price changes, the demand for tacos is elastic. Because the quantity demanded of gas is largely insensitive to price changes, the demand for gasoline is inelastic.
- Buyer’s Income Income Demand Income Demand Examples: Minimum wage increases Economic Recession The Great Depression Price of Substitutes Goods or services that can be used instead of other goods or services, causing a change in demand. Market Size Market Size Demand Market Size Demand Examples: Immigration Detroit after collapse of auto industry Consumer Tastes The popularity of a good or service has a strong effect on the demand for it, and in the marketplace, popularity can change quickly. Complement Goods When the use of one product increases the use of another product.
- The law of supply states that with fall in the price of commodity, there will be a decrease in the supply and similarly, when the price of a commodity rises, it will result in an increase in the supply of goods in the market, keeping all the other factors constant. Producer surplus is the difference between the lowest price a supplier will accept to produce the good (the opportunity cost of the resources) and the price they actually get (the market price). Producers are willing to supply the first 8 thousand pizzas for less than $20. Hence, the area above the supply curve but below the actual market price represents producer surplus. Producer surplus represents the net gains to producers (including resource suppliers) from the sales.
- Law of Demand states that as the price of a commodity falls, the corresponding demand increases and with rise in price, the demand of the commodity decreases. Therefore, there is an inverse relationship between the price of a commodity and its demand.
- Supply schedule shows the relationship between the price of goods and the quantity of goods supplied. It can also be said that supply schedule is a representation of the law of supply in a tabular form. Similar to the demand schedule, there are two types of supply schedule, which are 1. Individual Supply Schedule 2. Market Supply Schedule
- When the market price for soft drinks increases from $1.00 to $1.50 a six-pack, the quantity supplied to the market rises from 100 to 200 million units per week. When the market price for physician services rises from $100 to $150 an office visit, the quantity supplied rises from 10 to 12 million visits per week. Because soft drink supply is quite sensitive to price changes, its supply is elastic. Because the supply of physician services is relatively insensitive to changes in price, its supply is inelastic.
- Change in Supply – a shift in the entire supply curve. Change in Quantity Supplied – movement along the same supply curve in response to a change in its price. The following will cause a change in supply (a shift in the entire curve): Changes in resource prices Changes in technology Elements of nature and political disruptions Changes in taxes Number of Products: A successful new product or service always brings out competitors who initially raise overall supply. Input Costs: Input costs, the collective price of resources that go into producing a good or service, affect supply directly Examples Minimum Wage increases Cost of cotton increases, supply of t-shirts decreases 3) Labor Productivity: Better trained or more-skilled workers are usually more productive. Increased productivity decreases costs and increases supply. 4) Technology: By applying scientific advances to the production process, producers have learned to generate their goods or services more efficiently. 5) Government Action: Government actions, such as taxes or subsidies, can have a positive or negative effect on production costs. 6) # of Sellers: # of sellers increases, supply increases # of sellers decreases, supply decreases Examples: McDonald’s Plans to Open 1,000 new stores in 2010 All Circuit City stores in America went out of business 7) Producer Expectations: The amount of a product that producers are willing and able to supply may be influenced by whether they believe prices will go up or down.
- Situation in which prices are relatively stable and the quantity of goods or services supplied is equal to the quantity demanded. QS = QD Equilibrium Price – the price that “clears the market.” No Shortage or Surplus. Let’s return to the market for calculators. When the market is in equilibrium – where quantity supplied just equals quantity demanded – price equals $10. Recall that the area above the market price and below the demand curve is called consumer surplus and that the area above the supply curve but below the market price is called producer surplus. Together, these two areas represent the net gains to consumers and producers of the product. When equilibrium is present, all of the potential gains from production and exchange are realized. It is economically efficient to undertake actions when the benefits of doing so exceed the costs. What is the consumer’s valuation of the 450th unit of calculators brought to market? What is the opportunity cost of delivering the 450th unit to market? Does it make sense, from an economic efficiency standpoint, to use resources to supply this unit?
- Yes = Elastic No = Inelastic Can purchase be delayed? Are there adequate substitutes? Does purchase use a large portion of income? 2 or more yes’s = elastic 2 or more no’s = inelastic Substitutes Percentage of income Necessity Duration Breadth of definition